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Edited version of your written advice
Authorisation Number: 1012931686167
Date of advice: 13 January 2016
Ruling
Subject: Repayment of income
Question 1
Where you repay the net amount to your former employer, are you entitled to reduce your assessable income by the total taxable component of the ETP for the 20XX financial year?
Answer
No.
Question 2
Are you required to repay the gross amount to your former employer to be entitled to reduce your assessable income by the total taxable component of the ETP for the 20XX financial year?
Answer
Yes.
The scheme commenced on
1 July 20XX
Relevant facts
You received an ETP from your employer in 20XX. The payment contained a taxable component which was declared as assessable income on your 20XX tax return. There was also a tax free component.
After some time you were later eligible to apply for another ETP. This benefit was paid in the relevant financial year.
Your 20XX PAYG payment summary shows a taxable component and a tax free component.
After receiving the payment in the relevant financial year you were contacted by your previous employer and were advised that you were required to pay back the previous ETP.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Subsection 6-10
Income Tax Assessment Act 1997 Section 59-30
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes the ordinary income they derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Section 6-10 of the ITAA 1997 refers to other assessable amounts that are not ordinary income. These amounts are called statutory income.
After the receipt of your second payment, your former employer advised that you are required to repay the original payment.
Section 59-30 of the ITAA 1997 states that an amount you receive is not assessable and is not exempt income for an income year if:
(a) you must repay it; and
(b) you repay it in a later income year; and
(c) you cannot deduct the repayment for any income year.
Where the gross amount is repaid to your former employer, the previous payment amount declared on your 20XX tax return is not assessable and not exempt income under section 59-30 of the ITAA 1997. You can then request an amendment to your 20XX assessment.