Ordinary Income

Plain English Meaning

Income from activities such as employment, business or investments that has the character of income under ordinary concepts. Its tax treatment depends on the recipient, applicable provisions and circumstances.

Technical Meaning

Ordinary income is income according to ordinary concepts as defined by judicial precedent and included in assessable income under section 6-5 of the ITAA 1997. It is characterised by qualities of periodicity, regularity, or recurrence and typically arises from employment, business, property, or a deliberate profit-making activity. The concept is distinguished from statutory income (section 6-10) and capital receipts.

Legislative References

• • Income Tax Assessment Act 1997, section 6-5
• • Income Tax Assessment Act 1997, section 6-10 (statutory income — distinguished)
• • Income Tax Assessment Act 1936, section 25(1) (predecessor provision)

Examples

• • Salary and wages from employment
• • Business profits from trading activities
• • Interest income on bank deposits
• • Rental income from investment properties
• • Dividends received from shares
• • Profit from an isolated transaction entered into with a profit-making purpose (per Myer Emporium)