1.

3 Assessable Income (s6-5, 6-10)

Ordinary Concepts
Amts received from
property
Eisner v Macomber
-rents, royalties,
interest, div

Regular,
recurrent,
periodic amt
FCT v Dixon

Amts incidental to
employment or
services rendered
Kelly v FCT;FCT v
Smith; Scott v FCT

Gain from isolated transaction

FCT v Myer Emporium
Conditions:
1) Course of carrying on a business
2) Profit making purpose

Amts received in
replacement of
income is income
Liftronic PL v FCT

Amt not convertible into money is not income

FCT v Cooke & Sherden
-s21A rectifies this problem for business benefits
(arms length value)
exceptions:1) otherwise ded s21A(3);2) non-ded
entertainment s21A(4);3) <$300 s23L(2)
-captured by s26(e) for employment relationships
subject to FBT

Capital Receipts
Once-off/nonrecurring
transaction

Transaction represents realisation

or sterlisation of an asset
- exceptions when undetaking
business in buying/selling property
(Scottish Australian Mining)

Usually received in lump sum

- instalments still capital
(Californian Oil Products)
-interest component income

Single unallocated amts

for compensation
- McLaurin v FCT

Compensation
leading to end of
business

Statutory Income
Disposal of leased car for profit (s20-110)
Amt included in AI is the lesser of:
1) Total allowable deductions for lease pmt
(factor business use)
2) Diff btwn purchase price+capital improv
and proceeds
3) Notional depn dif btwn cost to lessor
and terminal value

Dividends
Dividends included
s44(1)
Gross-up of AUS dividend
s207-20(1)
[individuals], s207-35(1) [partnership/trust]
Gross-up of foreign dividend
s6AC
Imputation credit for domestic
s207-20(2)
s6AC
Imputation credit for foreign

ETP
Refer to CLP42 for
worked example
and Activity 4
More specific provision will prevail s6-25

ESS
Issue must be:
1) Related to employment (s139C(1))
2) Share must be qualifying share or
right (s139CD)

[CCH Note: The following amounts are the upper limits for income years commencing with 1989/90:
Income year
Upper limit
1989/90
$64,500
1990/91
$68,628
1991/92
$73,776
1992/93
$76,949
Yes
1993/94
$77,796
1994/95
$79,975
1995/96
$83,574
Election to include
1996/97
$86,917
discount in AI @
1997/98
$90,916
year of acquisition
1998/99
$94,189
(s139E)
1999/2000 $97,109
Yes
No
2000/01
$101,188
2001/02
$105,843
Exempt concession s139BA
Deferral concession
2002/03
$112,405
1) Discount based on MV of
(s139B(3)
2003/04
$117,576
shares at acquisition,
-discount is incl in AI @ cessation time
2004/05
$123,808
2) cost base incl full
1) discount based on MV at cessation time
2005/06
$129,751
consideration paid by TP
2) Consideration on subsequent sale is
2006/07
$135,590]
-entitled to $1000 discount
based on MV @ cessation (s130-83)

Ken Choi 2007

1.3 Assessable Income (s6-5, 6-10) p2

Non-assessable non-exempt income

Exempt income
Exempt because
of the nature of
recipient entity
(s11-5)

Exempt because
type of income
s11-10
-FBT exempt
s23L(1A)

Type of income in
hands of recipient
s11-15
-social sec pmt
Div52

Derivation of income Cash v Accruals TR98/1

calculated to give a
substantially correct
reflex of TPs true
income
- Cardens Case

Principle of
constructive
receipt
-s6-5(4), s6-10(3)

Cash Basis
- Services based on his/her
personal skill & expertise
(Firstenberg, Dunn)

Accruals Basis
-larger the coy,
more likely accrual
(Hendersons)

Income not considered

derived until services
have been rendered
(Arthur Murray)

When income is derived

Ken Choi 2007