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Edited version of private advice
Authorisation Number: 1051534703159
Date of advice: 24 June 2019
Ruling
Subject: Assessability of an award
Question and answer:
Is the cash award of $X assessable?
No.
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.
Generally, a receipt is considered income according to ordinary concepts it is a receipt arising out of a person's employment, business activities or income producing activities. Such payments are expected, periodic, and relied upon by the taxpayer. However, windfall gains which result from winning a prize, a lottery or any other game of chance are not assessable. Also, a receipt that is merely a gift will not constitute income according to ordinary concepts.
Your situation the award was not directly related to any services provided to an employer, the receipt did not have the character of income. The payment was not expected, periodic, and relied upon by you. The cash award that you received is that of a personal windfall or gain and not having the qualities of income and is, therefore, not assessable
This ruling applies for the following period(s)
Year ended 30 June 2018
The scheme commences on
1 July 2017
Relevant facts and circumstances
You were a member of international organisation A. You were also an employee of international organisation B, a separate organisation.
While employed by international organisation A, you provided professional services on a pro-bono basis to international organisation B.
International organisation B gave you a case award of $X for overall contribution to that organisation's development. It was not remuneration for any specific consultancy services.
Relevant legislative provision
Income Tax Assessment Act 1997 Subsection 6-5(2).