Edited version of private advice

Authorisation Number: 1052331667128

Date of advice: 14 November 2024

Ruling

Subject: Non-assessable income

Question

Will the XXXX Grant awarded to me, be considered assessable income and required to be declared in my Income Tax return?

Answer

No.

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a taxpayer's assessable income includes income according to ordinary concepts, known as ordinary income. Ordinary income will generally have the characteristics of being periodic, recurring, and regular.

The money received from the XXXX Grant does not have the characteristics of ordinary income and was not granted in the furtherance of a business. Therefore, as the grant does not meet the characteristics of ordinary income, it is not required to be declared in your income tax return.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 2024

Relevant facts and circumstances

You applied for XXXX Grants for the 20XX financial year.

You were awarded the XXXX Grants; you have not yet accepted the funding.

You applied for a grant on behalf of yourself and 4 other neighbours in adjoining properties, with their consent and support.

Over a 2-year period, the total amount of the grant is $XX,XXX,XX for the 5 properties.

The total area of the 5 properties is 5,122 hectares.

Grant funding

•         The grant funds are paid directly into your nominated bank or other financial institution account.

•         Works required include, Landcare, weed management and revegetation on private land.

•         Contractors are paid a lump sum directly from you, in the year the work is completed.

•         You do not receive or retain any of the grant funds as payment for your services provided.

•         At the end of the 2-year period, the provider runs an acquittal process and reclaims any unused funds.

•         You volunteer services and time as per the not-for-profit requirement of the provider's XXXX Grant project.

Further issues for you to consider

We have limited our private ruling to the questions raised in your application. There may be related issues that you should consider, including:

If over time you earn interest from the grant funds received into your bank or other financial institution account, this will be part of your assessable income and is required to be declared in your tax return.

Interest from a bank or other financial institution is part of your assessable income for the year. Even if the funds earning the interest were not subject to tax, the interest is.

For more information, refer to QC 22809.

Relevant legislative provisions

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