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Edited version of private advice
Authorisation Number: 1051658545544
Date of advice: 14 April 2020
Ruling
Subject: Assessable income - financial institution error
Question 1
Is the refund of the First Home Owners Grant payment you received from your financial institution included in your assessable income?
Answer
No.
The primary purpose of payments under the First Home Owners Grant scheme was to provide financial assistance to home owners in the purchase of their first home by way of a one off lump sum payment. Payments under the scheme are not considered to be income according to ordinary concepts and the refund of this amount to you does not change this. Therefore, the amount you received does not form part of your assessable income.
Question 2
Is the payment of interest you received from your financial institution in compensation for an error it made included in your assessable income?
Answer
Yes.
Interest income is income according to ordinary concepts and forms part of a taxpayer's assessable income. The receipt of interest to compensate for an error is treated in the same way.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You purchased a dwelling and took out a home loan with a financial institution.
You applied for a payment under the First Home Owners Grant scheme and were successful.
Your financial institution did not credit the amount of the First Home Owners Grant payment to your home loan.
After your financial institution discovered the error it paid you the amount of the First Home Owners Grant payment along with interest to compensate you for the error.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5