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Edited version of private advice
Authorisation Number: 1051620256383
Date of advice: 12 December 2019
Ruling
Subject: Assessable income - receipt of Commonwealth grant
Question:
Will the total grant amount of $XXX,XXX be assessable to you when received in instalments?
Answer:
No. As you acted as the agent for Entity A when you applied for the Grant, the instalment amounts are not assessable to you to the extent that they are used in relation to undertaking activities in relation to the construction of the structure at Entity A (the Project) and are not received by you for any services you provide in relation to those activities.
This ruling applies for the following period
1 November 2019 to 30 December 2021
Relevant facts and circumstances
You are a sole trader who operates cultural workshops and creates items for sale through your business.
You operate your activities from traditional land which is part of Entity A.
Your spouse is a traditional owner of a Land Trust which holds many outstations based on land held by the Land Trust, including Entity A.
You do not have a formal lease with the Land Trust as there is no requirement for one to be in place.
You, in the role as agent for Entity A, applied for a grant (the Grant) to fund the erection of a proposed structure (the structure) at Entity A, referred to as the Project.
The objectives of the Grant are:
· to provide the Community with secure storage for a tractor/slasher
· to provide access to a suitable training/workspace for members of the Community
· to provide employment and training opportunities via Community Development Program (CDP)
· to provide economic development opportunities for local people through your business; and
· to enable Community members to take responsibility for maintenance of access roads and firebreaks around Entity A while developing their skills and knowledge, and increasing their capabilities for employment in the region.
The granting organisation issued a Project Agreement which includes the following information:
|
Project name |
Entity A Development |
|
Provider name |
You |
|
Trading/business name |
Your business |
|
Date for completion of works |
XX December 20XX |
|
Milestones |
You must achieve the following milestones within the timeframe: · XX October 20XX - Completion of plans, granting of all permits licences, order structure, fixtures, fittings and submit copy of purchase orders · XX January 20XX - site preparation, laying of slab, installation of plumbing and electrical, submission of invoices relating to this milestone · XX June 20XX - completion of structure to internal lockup stage and submit invoices relating to this milestone · XX September 20XX - completion of works, submission of compliance certificates, permits and approval documents relating to the work and written certification by Project Manager, submit Certificate of Occupancy |
|
Anticipated dates of grant payments |
You must use the Grant only for the purpose of the Project. The Grant will be paid upon the achievement of the Milestones in a number instalments as outlined in the Project Agreement |
|
Total grant payable |
Total payments $XXX,XXX (GST inclusive) |
|
Budget |
Unless otherwise approved by the Commonwealth in writing, you must spend various amounts as specified in the Project Agreement to pay for specified activities |
The structure will be constructed at Entity A, which will be the owner of the structure.
For the purposes of this ruling the structure will be constructed at Entity A in accordance with the terms and conditions as outlined in the Project Agreement.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 6