2. Income.docx - Income What income is assessable A persons...

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Income What income is assessable? A person’s income is comprised of ordinary and statutory income ( ITAA97 s 6-1 ). Process for determining whether it is assessable income: 1 Is the income ordinary income? 2 Is the income statutory income (ie does a specific assessing provision apply)? 3 Is it exempt income? {ie through specific provision or residence & source rules} 4 If it does not fit into any of these, it is non-exempt, non-assessable income. 3.1.General rule: Is it ordinary income? : Assessable income includes ordinary income derived from [all sources {for Australian residents} OR Australian residents {for foreign residents}] ( ITAA97 s 6-5 ). Ordinary income is determined according to the ordinary concepts and usages of mankind. ( ITAA s 6-5; Scott v C of T (NSW) ). According to this concept, income is seen as a flow, but not the proceeds from the sale of an asset ( Eisner v Macomber ). 3.2.How to determine ordinary income from first principles : Where the receipt does not fit within an established category, we must examine a range of factors to determine whether it is ordinary income.
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