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Is a fixed amount that is paid to a participant in a market research session to cover any expenses they may have incurred in attending that session, assessable income under paragraph 26(e) of the Income Tax Assessment Act 1936 ('ITAA 1936')?

Yes. A fixed amount that is paid to a participant in a market research session to cover any expenses they may have incurred in attending that session is assessable income under paragraph 26(e) of the ITAA 1936.

The taxpayer was recruited to participate in a market research session. This essentially involved the taxpayer giving their views and suggestions on various products under development which were shown to the taxpayer during the session.

The taxpayer was paid a fixed amount to cover their expenses in attending the session, rather then being reimbursed their actual expenses.

Paragraph 26(e) of the ITAA 1936 includes as assessable income the value to a taxpayer of all allowances paid to them in respect of, or for or in relation directly or indirectly to services rendered by the taxpayer.

Taxation Ruling TR 92/15, at paragraph 2, states that a payment is an allowance if a person is paid a fixed, predetermined amount to cover an expense. The amount is paid irrespective of whether the recipient incurs the expense.

An allowance paid to a taxpayer in relation to services they provide is assessable income, even though the taxpayer did not provide those services as an employee or in carrying on a business ( Brent v. Federal Commissioner of Taxation (1971) 125 CLR 418; 71 ATC 4195; (1971) 2 ATR 563).

The payment to the taxpayer was a fixed amount to cover expenses in participating in the market research. The payment falls within the meaning of 'allowance' under paragraph 26(e) of the ITAA 1936.

Accordingly, the allowance received will be included in the taxpayer's assessable income under paragraph 26(e) of the ITAA 1936.