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Ruling
Subject: Assessability of compensation payment
Question:
Is the total compensation amount received assessable to the deceased estate?
Answer:
Yes.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
The deceased passed away during the relevant financial year.
After his/her death, a government authority (the authority) certified that the deceased had contracted a disease, within the meaning of the Worker's Compensation (Dust Diseases) Act 1942, and he/she was 100% disabled for work in the period prior to his/her death.
As a result of the authority's certification, the deceased was awarded a fortnightly compensation payment in arrears for the period prior to his/her death.
The authority stated that this amount included an 'allowance' for his/her spouse.
The total amount of compensation payable was paid to the deceased's estate.
Relevant legislative provisions
Workers Compensation Act 1987 - section 37
Income Tax Assessment Act 1997 - Section 6-5
Reasons for decision
The compensation amount received by the deceased estate was calculated under the New South Wales Workers Compensation Act 1987 (WCA). Under the previous section 37 of the WCA (amended in January 2012), the weekly payment of compensation to an injured worker with total incapacity, after the first 26 weeks of incapacity, includes an additional amount per week payable 'in respect of' a dependant spouse.
The amounts received under this provision are indexed.
It is clear from the wording of this provision that the additional amount payable 'in respect of' a dependant spouse is simply an amount used to calculate the total benefit payable to the injured worker and is not a separate amount payable to the spouse.
Therefore, the total compensation amount received is assessable to the deceased estate under subsection 6-5(2) of the Income Tax Assessment Act 1997.
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