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Edited version of your written advice
Authorisation Number: 1051356364694
Date of advice: 29 March 2018
Ruling
Subject: Industry assistance payment
Question 1
Is the lump sum payment you received under an industry assistance package (IAP), ordinary income?
Answer
No.
Question 2
Is the lump sum payment you received under an industry assistance package (IAP) included in the cost base of your asset?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2018
Year ending 30 June 2019
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You have received a lump sum payment under an IAP.
Prior to receiving the payment you had advertised your assets for sale, as it is your intention to permanently and completely exit the industry.
Relevant legislative provisions
Income Tax Assessment Act 1997, section 6-5
Income Tax Assessment Act 1997 section 15-10
Income Tax Assessment Act 1997 section 104-10
Reasons for decision
Taxation Ruling TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue commence or cease business, outlines the Commissioners view on industry assistance payments.
Generally the nature of a payment is objectively determined by the character of the payment in the hands of the recipient. Having considered your circumstances and the relevant factors, the Commissioner considers the payment you have received is capital in nature and can be included in the calculation of the capital gain or capital loss that is made when you dispose of the assets.