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Edited version of private advice
Authorisation Number: 1051810983340
Date of advice: 4 March 2021
Ruling
Subject: Income tax - assessable income
Question
Does any part of the amount you received constitute assessable income?
Answer
No. Having considered your circumstances it is accepted that the amount received of $XXX.XX is essentially a gift and not assessable income to the deceased estate or to you. As this amount does not constitute assessable income in accordance with section 6-5 of the Income Tax Assessment Act 1997, this amount does not need to be reported in the deceased estate's income tax return or your income tax return for any income year.
This ruling applies for the following period:
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are the sole beneficiary and trustee for a deceased's estate.
The deceased passed away in 20XX. The deceased estate's final tax return was lodged, and the estate was fully administered in the year ended 30 June 20XX.
During the deceased's lifetime they held an account with a bank. Due to an error in the bank's records they were unsure as to whether the deceased had been provided a service for which they had been charged fees and therefore decided to refund the fees.
In 20XX the deceased estate received a cheque for $XXX.XX for a refund of incorrectly charged fees and interest on the incorrectly charged fees.
You were aware that the service for which the fees had been charged had been provided by the bank and therefore the fees had been correctly charged and there was no entitlement to a refund.
You made enquiries with the bank regarding this refund, stating this was incorrect and you were not entitled to this refund. You attempted to return the cheque to the bank.
After many months of communicating with the bank, they requested that you accept the amount, so you accepted it as a gratuity, and this was paid into your personal bank account.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5