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Edited version of your written advice
Authorisation Number: 1012906528523
Date of advice: 11 November 2015
Ruling
Subject: Assessable income
Question
Are the monies donated to a deductible gift recipient (DGR) and passed to the taxpayer's bank account assessable in the taxpayer's hands?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
Year ended 30 June 2018
The scheme commences on:
1 July 2014
Relevant facts and circumstances
The applicant is a volunteer for a non-profit organisation operating overseas for a minimum 2 year period.
Friends, family and acquaintances have given, and may give, gifts to a DGR which are passed onto the taxpayer assist in covering costs incurred during their voluntary service.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Section 6-10
Income Tax Assessment Act 1997 Section 15-2
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
Section 6-10 of the ITAA 1997 provides that amounts that are not ordinary income may be included in assessable income under another provision as statutory income. Section 15-2 of the ITAA 1997 provides that the value of all allowances, gratuities, compensation, benefits, bonuses and premiums given or granted in respect of employment or services rendered are included in assessable income.
Ordinary income has generally been held to include 3 categories, namely, income from rendering personal services, income from property and income from carrying on a business.
The courts have identified a number of factors which indicate whether an amount is regarded as ordinary income. Characteristics of ordinary income that have evolved from case law include receipts that:
• are earned,
• are expected,
• are relied upon, and
• have an element of periodicity, recurrence or regularity.
In your case, monies are donated to a deductible gift recipient (DGR) rather than to you personally and are then passed onto you.
The income is not earned as you are not employed by the (DGR) but rather as a volunteer. The monies are expected as the DGR requires you to cover the cost of your voluntary service and encourages you to seek donations from family, friends to help cover costs.
You have solicited a number of people to regularly donate monies to the DGR to assist you with the cost of volunteering. Thus the monies are expected and you rely on these monies to cover and maintain your day-to-day living expenses.
Any balance that remains in your 'account' can be retained by you on completion of your voluntary service period.
Therefore, it is considered that the donations made to the DGR with a preference to be passed to you are assessable in Australian under 6-5(2) of the ITAA 1997.
Therefore, in accordance with the principles of ordinary income these monies must be included in your assessable income under section 6-5 of the ITAA 1997.