Issue
Is the partial remission of the General Interest Charge (GIC) in an amended income tax assessment, included in the taxpayer's assessable income under section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) in the year of income the amended assessment issues?
Decision
Yes. The partial remission of the GIC in an amended income tax assessment is included in the taxpayer's assessable income under section 6-10 of the ITAA 1997 in the income year the amended assessment issues.
Facts
The taxpayer received an amended income tax assessment on 15 August 2000 that included an amount of GIC of $1523.
The taxpayer requested a review of the GIC imposed. The review resulted in a partial remission of GIC of an amount of $856.
The GIC was remitted by an amended assessment which issued to the taxpayer on 9 November 2000.
Reasons for Decision
Section 6-10 of the ITAA 1997 provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included in assessable income by another provision. Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in that list is recoupment for certain losses and outgoings that are deductible under Subdivision 20-A of the ITAA 1997.
A recoupment is defined in subsection 20-25(2A) of the ITAA 1997 to include where: • a taxpayer has incurred expenditure that consists of the GIC under Division 1 of Part IIA of the Taxation Administration Act 1953 (TAA 1953); and • the Commissioner remits any of that GIC charge,
the taxpayer is taken to have received that remitted amount as a recoupment of that expenditure.
Subsection 20-20(3) of the ITAA 1997 provides that an amount received by a taxpayer is an assessable recoupment if it is deductible in a current or earlier income year under a provision listed in section 20-30 of the ITAA 1997.
Item 1.3 of the table in subsection 20-30(1) of the ITAA 1997 includes tax related expenses deductible under section 25-5 of the ITAA 1997. Paragraph 25-5(1)(c) of the ITAA 1997 states that expenditure for the GIC under Division 1 of Part IIA of the TAA 1953 is a deductible tax related expense.
Where the whole of the loss or outgoing is deductible either in the current or an earlier income year, section 20-35 of the ITAA 1997 provides that the taxpayer's assessable income includes the amount of the recoupment up to the amount of the loss or outgoing.
Accordingly, the taxpayer's assessable income will include $856 of remitted GIC in the 2001 income year under section 6-10 of the ITAA 1997.