ATO Interpretative Decision
ATO ID 2001/715
Personal tax
Assessability of grants paid under the First Home Owners SchemeFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is a First Home Owners Scheme grant received by the taxpayer assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. A First Home Owners Scheme grant received by the taxpayer is not assessable income under section 6-5 of the ITAA 1997 as it is not income according to ordinary concepts.
Facts
The taxpayer received a grant under the First Home Owners Scheme as an eligible first home owner.
Reasons for Decision
From 1 July 2000, eligible first home owners were entitled to receive a one off grant under the First Home Owners Scheme, an initiative of the Commonwealth Government administered by the States and Territories.
The primary purpose of the grant is to provide financial assistance to home owners in the purchase of their first home.
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
Ordinary income is income according to ordinary concepts and is generally considered to include:
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- amounts received in return for personal services, whether received in the capacity of an employee or otherwise; and
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- amounts received periodically or regularly and which the recipient relies on for the maintenance of themselves and /or their dependants (Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 541).
First Home Owners Scheme grants are not paid because of employment, services rendered, investment or the operation of a business. The grants are received as a one off lump sum payment and the motive of the body making the payment is to provide assistance for the purchase of a first home, not to help the recipients or their dependants pay for their regular living expenses.
The grant is not income according to ordinary concepts and therefore is not ordinary income. Accordingly, the First Home Owners Scheme grant will not form part of the taxpayer's assessable income under section 6-5 of the ITAA 1997.
Date of decision: 16 July 2001
Legislative References:
Income Tax Assessment Act 1997
section 6-5
subsection 6-5(2)
Case References:
Federal Commissioner of Taxation v. Dixon
(1952) 86 CLR 540
Keywords
Income
Ex gratia payment income
Government grants income
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 16 July 2001 | Original statement |
| 6 June 2014 | Updated statement |