Edited version of private advice

Authorisation Number: 1051532118481

Date of advice: 19 June 2019

Ruling

Subject: Income

Question

Is the Post-doctoral Fellowship you received assessable in Australia?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 2018

The scheme commences on:

1 July 2017

Relevant facts and circumstances

You are a resident of Australia for taxation purposes.

You are employed in Australia.

You have been employed in Australia for X years and your position is ongoing.

You applied for a fellowship in an overseas country and was awarded it for six months.

You were paid a monthly stipend for the six months you were overseas.

You and your family went to the overseas country for the six month period of the fellowship.

You remained employed with your Australian employer for the period you were in the overseas country.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(2)

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 ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business.

Based on case law, it can be said that ordinary income generally includes receipts that are earned, expected, relied upon, and have an element of periodicity, recurrence or regularity.

The legislation does not provide specific guidance on the meaning of income according to ordinary concepts. However, a substantial body of case law exists which identifies likely characteristics.

In GP International Pipecoaters Pty Ltd v. Federal Commissioner of Taxation, the Full High Court stated:

To determine whether a receipt is of an income or of a capital nature, various factors may be relevant. Sometimes the character of receipts will be revealed most clearly by their periodicity, regularity or recurrence; sometimes, by the character of a right or thing disposed of in exchange for the receipt; sometimes, by the scope of the transaction, venture or business in or by reason of which money is received and by the recipient's purpose in engaging in the transaction, venture or business.

Amounts that are periodical, regular or recurrent, relied upon by the recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income, as are amounts that are the product in a real sense of any employment of, or services rendered by, the recipient.

Ultimately, whether or not a particular receipt is ordinary income depends on its character in the hands of the recipient. The whole of the circumstances must be considered and the motive of the payer may be relevant to this consideration.

Stipend

The Macquarie Online Dictionary defines a stipend in is fixed or regular pay; periodic payment; salary.

You received a monthly stipend payment for the six months of your fellowship in the overseas country.

The monthly payments you receive are considered to be ordinary income, being periodical receipts that are expected and relied upon by you.

In your application you refer to Case 4594 (1988) 19 ATR 3841(Case 4594). The Commissioner's view is that, in cases for which Case 4594 may be applicable, Kelly's Case (Kelly v. Federal Commissioner of Taxation 85 ATC 4283; 16 ATR 478) takes precedent. Kelly's case related to an award given to a footballer and the facts of Kelly's case are materially similar to those in Case 4594. The result of Kelly's case was that the award was found to be assessable.

The stipend you received is assessable in Australia and must be included in your Australian tax return.