ATO Interpretative Decision

ATO ID 2003/1066

Income Tax

Structured Settlement: overseas court order - Division 54
FOI status: may be released

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Issue

Does an overseas court order satisfy the requirements of a court order under Division 54 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. The court order satisfies the requirements of a court order under Division 54 of the ITAA 1997.

Facts

A child was born with severe disabilities and has associated learning difficulties.

An overseas court awarded damages to the child.

The parents decided to emigrate to Australia. The overseas court order was made to enable transfer of the damages to Australia. The court order specifies an amount of damages to be awarded by way of a structured settlement.

Reasons for Decision

The term 'court order' is not defined in the ITAA 1997, so is given its ordinary meaning.

In the context of this case, the word 'court' is defined in The Macquarie Dictionary 2001 rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as 'a place where justice is administered'. As there is no suggestion that the term is confined to courts established within the boundaries of a particular country, a settlement obtained after the decision of a court in an overseas jurisdiction may fall for consideration under Division 54 of the ITAA 1997. 'Order' is defined in The Macquarie Dictionary as an authoritarian direction, injunction, command, or mandate.

The requirement for a structured settlement under paragraph 54-10(1)(d) of the ITAA 1997 is for a written agreement between the parties (whether or not that agreement is approved by an order of a court, or is embodied in a consent order made by a court). The document which has been quoted in part in the facts of this case satisfies this provision.

Date of decision: 18 October 2003

Year of income: Year ended 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
Division 54
paragraph 54-10(1)(d)

Other References:
The Macquarie Dictionary 2001 rev. 3rd edn, The Macquarie Library Pty Ltd, NSW
Explanatory Memorandum to Taxation Laws Amendment (Structured Settlements and Structured Orders) Act 2002

Keywords
Courts
Legal Orders

Siebel/TDMS Reference Number: 3685334

Business Line: Public Groups and International

Date of publication: 28 November 2003

ISSN: 1445-2782

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