General Concept of Income.

GENERAL CONCEPT OF INCOME

Statutory Provisions - ss. 6(1) & s.26(e)ITAA36.

1.2 Income According to Ordinary Concepts and Usages

S6-5 - general provision capturing assessable income

Employs the general common law concept of income, income according to ordinary concepts based on cases.

Assessable income of a taxpayer includes where the taxpayer is a:

(a) Resident - gross income derived from all sources in or out of Australia

(b) Non resident - gross income derived from all sources in Australia

There is no general definition of "income" contained in the ITAA nor in any of the cases.

The courts tend to classify certain gains as income by employing various categories of income and have developed numerous tests to determine whether the gain in question comes within one of those categories of income.

• income from employment or rendering services,

• income from carrying on a business,

• income from carrying on a profit-making scheme,

• income from property, such as interest, dividends, rent, royalty

But there is no single test for the meaning of "income" under the common law.

S. 6(1), ITAA36 - provides circular definitions of different types of income but never actually defines income as a whole. S. 6(1) merely distinguishes between different aspects of an undefined whole.

S. 6(1) distinguishes between

(1) Income from personal exertion which means

"income consisting of - earnings, salaries, wages, commissions, fees, bonuses, pensions, allowances and gratuities received in the capacity of employee or in relation to services rendered",

"income consisting of -the proceeds of any business carried on by the taxpayer",

"income consisting of -any profit arising from the sale by the taxpayer of any property acquired by him for the purpose of profit-making by sale or from the carrying on or carrying out of any profit-making undertaking or scheme"

(2) Income from property which means "all income which is not income from...