Edited version of your written advice

Authorisation Number: 1051219933399

Date of advice: 2 May 2017

Ruling

Subject: Capital gain vs income - lump sum payment - CGT small business concessions

Question 1:

Is the lump sum payment received from Company included in your assessable income as a capital gain from CGT event D1 under section 104-35 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer:

No. However, it will be assessable as ordinary income under section 6-5 of the ITAA 1997.

Question 2:

Will you be able to access the small business concessions under Division 152 of the ITAA 1997?

Answer:

No, as the lump sum payment is not assessable as a capital gain you will not be eligible to apply the capital gains tax small business concessions to the lump sum amount.

This ruling applies for the following period

Income year ending 30 June 20YY.

The scheme commences on

1 July 20XX.

Relevant facts and circumstances

You are a private company which operates a medical practice.

You are the trustee (the Trustee) of the Trust.

Your director and the sole beneficiary of the Trust is X who is a registered practitioner.

You were contracted with Company A to use the general practice facilities supplied at a specified medical clinic to operate your practice.

The terms of the contract include:

● Company A supplies the medical clinic building, administrative support, and other necessary items required to run a general practice; and

● you paid Company A a specified percentage of your patient billings.

X was approached by Company A which offered X a new contract (the Agreement).

In consideration for you entering into the Agreement for a fixed term and agreeing to certain restraints, Company A agreed to pay you a lump sum of $XXX,XXX.

X in their role as your authorised representative signed the revised terms contained in the Agreement as your representative and in their personal capacity.

Pursuant to the revised terms under the new Agreement:

● X would be contracted for a specified number of years, to work a specified number of weeks during a specified number of weeks per year; and

● the service fee would be a specified percentage of the service fees, plus Goods and Services (GST).

Special conditions or variations to the Agreement included the following:

● Company A would pay a specified lump sum amount

● If the Agreement was breached by you or X, or Company A terminates the Agreement, you must pay Company A a specified amount, plus GST; and

● X agrees that they will not provide any services within a specified distance of Company A's medical centre for a specified period after the termination of the Agreement.

During the next month, authorised representatives of Company A signed the Agreement on behalf of Company A.

In the following month you received the $XXX,XXX lump sum payment.

Relevant legislative provisions

Income tax Assessment Act 1997 Section 6-5

Income tax Assessment Act 1997 Section 102-5

Income tax Assessment Act 1997 Section 104-35

Income tax Assessment Act 1997 Section 118-20

Income tax Assessment Act 1997 Division 152

Income tax Assessment Act 1997 Parts 3-1

Income tax Assessment Act 1997 Parts 3-3

Reasons for decision

Question 1

Is the lump sum payment of $XXX,XXX received from Company A included in your assessable income as a capital gain from CGT event D1?

Summary

The amount of $XXX,XXX is assessable as ordinary income under section 6-5 of the ITAA 1997 as an incentive/inducement for you to operate your medical practice and provide the medical services of X at the medical clinic provided by Company A, as a permanent practitioner for Company A for a specified number of years.

Therefore, the amount will be returned in the year in which the amount is derived for income tax purposes, being the 20XX-YY income year.

Detailed reasoning

As a general principle, lump sum amounts will either be assessable as ordinary income under section 6-5 of the ITAA 1997, or as statutory income under the capital gains tax provisions contained in Parts 3-1 and 3-3 of the ITAA 1997.

Whether the lump sum amounts are treated as income or capital depends on the situation and circumstances of each particular case.

We will consider each of these in relation to your situation as follows:

Ordinary assessable income

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes the ordinary income they derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

The legislation does not provide any specific guidance on what is meant by 'income according to ordinary concepts'. However, a substantial body of case law has evolved to identify various factors that indicate whether an amount is income according to ordinary concepts.

In Scott v Commissioner of Taxation (NSW) (1935) 35 SR (NSW) 215; 3 ATD, Jordan CJ stated:

…the word income is not a term of art, and what forms of receipts are comprehended within it, and what principles are to be applied to ascertain how much of those receipts ought to be treated as income, must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as the statute states or indicates [to the contrary]…

A frequent characteristic of income receipts is an element of periodicity, recurrence or regularity, even if the receipts are not directly attributable to employment or services rendered (FC of T v Dixon (1952) 86 CLR 540 and FC of T v Blake 84 ATC 4661).

However, periodicity, recurrence or regularity is not always essential for an amount to be income. For example, the proceeds of an isolated transaction, even if received as a lump sum, may be income (FC of T v Myer Emporium Ltd 87 ATC 4363), while instalments of a capital sum, even though received regularly from one source, are not income. Equally, an unsolicited lump sum payment which is unlikely to be repeated is generally not income according to ordinary concepts (FC of T v Harris 80 ATC 4238), while lump sum damages will nevertheless be assessable where they are compensation for losses of an income nature only.

Further, personal earnings from the performance of services, whether as an employee or otherwise, are clearly income even if the services are performed, and/or the rewards received, irregularly.

It is also important to determine the character of the payment in the recipient's hands. That does not mean that the motive of the person in making the payment will be irrelevant but it will not be determinative. The test to be applied will be objective rather than subjective.

Based on the Agreement, the payment of $XXX,XXX (plus Goods and Services Tax (GST)) made to you appears to have been a one-off lump sum payment by Company A to you. Therefore, it is necessary to consider whether the payment has the character of income.

Incentive/ inducement payments

Based on case law precedents, incentive/inducement payments paid to taxpayers as lump sums can be assessable income.

Lump sum payments made to two taxpayers to ensure they remained in employment was held to be assessable income in McLean and Anor v FC of T (1996) 32 ATR 647; 96 ATC 4443 (McLean) and Dean and Anor v FC of T (1997) 37 ATR 52; 97 ATC. In the Federal Court decision in McLean, Northrop J stated the following at 96 ATC 4447:

In the present case, the Tribunal held that the retention payments received by the taxpayers constituted income derived by them within paragraph 25(1)(a) of the Assessment Act. In my opinion, the Tribunal was not in error in so concluding. In my opinion all the facts of this case point to the conclusion that the receipt of the retention payments by the taxpayers was related to their activities as employees and as continuing to be employees with the result that in substance and reality the amounts received were the product of the income-earning activity on the part of each taxpayer.

The nature of the payments is made clear by a reference to the contents of the letters written to them by Elders Resources. The payment was made as an inducement to each taxpayer to continue in his employment for a period of at least one year. If the taxpayer voluntarily left his employment, the amount of the payment was reduced but otherwise the payment was for the specified sum. The fact that this was not to be paid on a periodic basis does not detract from the true nature of the receipt of the payment. The continual employment was at the very heart of the receipt of the payment the amount of which was calculated having regard to the salary of the taxpayer. There is no similarity between the facts of this case and those discussed in Dickenson v. FC of T (1957) 11 ATD 157; (1958) 11 ATD 415; (1957-1958) 98 C.L.R. 460.

In Pickford v FC of T 98 ATC 2268; 40 ATR 1078 (Pickford), the taxpayer was an employee of E Ltd who had been granted options to purchase ordinary shares in his employer's parent company pursuant to an employee share scheme. However, the options would lapse immediately if the taxpayer ceased to be an employee of E Ltd.

W Ltd made an offer of employment to the taxpayer that included a payment of $20,000 as compensation for the potential capital gain that may have been available to the taxpayer in respect of the shares to which he would have been entitled had he remained an employee of E Ltd.

The Commissioner ruled that the payment was assessable as ordinary income, and affirmed this decision at the objection stage.

At the Administrative Appeals Tribunal, DJ Trowse (Member) upheld the Commissioner's decision, stating at page 2271 that:

14. The facts of this matter, when viewed objectively, leave the Tribunal in no doubt that the agreement to pay the $20,000 was an integral part of the offer made by W Ltd and accepted by the applicant. To exclude the $20,000 is to omit one of the main attractions from the overall salary package which, in the Tribunal's opinion, should be regarded as a single bundle of entitlements attaching to the offer of employment with W Ltd.

15. A consideration of all the material including the letter containing the offer (T3) leads the Tribunal to the conclusion that, irrespective of the description furnished to the amount in contention, it represented a straightforward inducement for the applicant to enter the employment of W Ltd. Furthermore, the Tribunal is satisfied that the source of the payment is to be found in the service to be rendered by the applicant to W Ltd and that it was in the nature of a benefit for future service.

It is also the Australian Taxation Office (ATO) view that the lump sum retention bonuses paid by the Australian Defence Forces (ADF) in order to encourage serving members to remain within the ADF for a fixed period are assessable as ordinary income (see ATO Interpretative Decision ID 2003/373). Notably, where these ADF members failed to complete the required period of service, they were contractually obliged to repay part of the retention bonus based on the incomplete part of the service.

Application to your circumstances

As stated in the Agreement, the $XXX,XXX (plus GST) lump sum amount paid to you was paid, prime facie: 'In consideration for you entering into the Agreement for a fixed term.' Indeed, where you breached the terms of the Agreement, or Company A terminated it, you were required to pay back a specified amount plus GST for each whole month remaining until the term of the Agreement expired. It can therefore be concluded that the character of the payment in your hands was an inducement for you to operate your medical practice at Company A's medical clinic and provide the services of X for the duration of the Agreement (in association with an agreement to abide by the 'restraint' provisions of the Agreement both for the term of the service and for a specified period afterward).

As outlined above in the Pickford decision, the lump sum payment you received was an 'integral part' of the Agreement, being part of '…a single bundle of entitlements…', and a 'straightforward inducement' to secure your future medical practice operations and the services of X for Company A over the period of the Agreement. It is also similar in certain respects to the retention bonus payments made to ADF members, which required a repayment of the lump sum to the extent the taxpayer did not complete the contracted period of service.

It is acknowledged that the lump sum payment made to you was in the context of a business rather than employment relationship. However, it is considered that the principles established in these case law decisions in relation to such incentive/inducement payments are equally applicable to a business service contract.

We have made the following observations based on the Agreement:

● it is reasonable to infer that the repayment included in the terms of the Agreement if the Agreement is breached or terminated is a reference to the repayment of the lump sum amount;

● the terms of the Agreement operates such that no value can be attributed to the restrictive covenant post termination of the Agreement. The lump sum is clearly an inducement payment; and

● the nature of the contract here is for the performance of your medical practice and the provision of X's services at a clinic operated by Company A for a fixed term period, and the lump sum payment (and its repayment on early termination) clearly link to this income-generating purpose.

The above factors indicate that the true nature of the lump sum payment is that of an inducement for you to operate your medical practice at Company A's medical centre, and provide the services of X for a fixed term period. As such, the whole of the lump sum payment is assessable as ordinary income under section 6-5 of the ITAA 1997.

Isolated transaction or commercial transaction

It is also arguable that the payment made to you is assessable as a business profit or gain, including a gain made as part of an isolated transaction.

The Commissioner's view on whether profits on isolated transactions are assessable income under ordinary concepts is contained in Taxation Ruling TR 92/3. Profit from an isolated transaction is generally income when both:

a. the intention and purpose for the taxpayer in entering into the transaction was to make a profit or gain and the transaction was entered into; and

b. the profit was made in the course of carrying on a business or in carrying out a business operation or commercial transaction.

Discussing the decision in FC of T v. Cooling [1990] FCA 204; 90 ATC 4472; 21 ATR 13 (Cooling), paragraph 50 of TR 92/3 states that:

50. The principal case since Myer in which a profit-making transaction has been held to be a business operation or commercial transaction is FC of T v. Cooling. There, the Full Federal Court (Lockhart, Gummow and Hill JJ) held that a payment received by a firm of solicitors as an incentive for it to relocate to new premises was income according to ordinary concepts. At the relevant time in the city where the firm practised, it was an ordinary incident of leasing premises of the type in question to receive incentive payments. Hill J (with whom the other judges agreed on the subsection 25(1) issue) said that where a taxpayer operates from leased premises, the move from one premises to another and the leasing of the premises occupied are acts of the taxpayer in the course of its business activity. At 90 ATC 4484; 21 ATR 27 Hill J concluded:

In my view the transaction entered into by the firm was a commercial transaction; it formed part of the business activity of the firm and a not insignificant purpose of it was the obtaining of a commercial profit by way of the incentive payment.'

Application to your situation

You entered into the Agreement with Company A in the course of carrying on your medical practice. The Agreement and the payments made under it solely relate to you entering into a business arrangement under which you would provide X's services at Company A's medical clinic for a fixed period, and would agree to be bound in the undertaking of this business and abide by certain restraints placed on you by Company A during the course of this service, and for a specified period after the termination of the Agreement.

We have made the following observations:

● the Agreement directly states that the lump sum payment is for you and X entering into the Agreement to provide the medical services of X for a specified period; and

● you had already commenced operating your medical practice with Company A prior to you entering into the new contract, the Agreement. Therefore you had already availed yourself of the benefits sought, before entering into the Agreement which entitled you to the lump sum payment.

It is also considered that the transaction was entered into, and the profit made, in the course of carrying on a business or in carrying out a business operation or commercial transaction. Based on the Agreement, it is viewed that you and Company A were clearly contracting on a commercial basis under a business relationship with incentive/inducement payments being common in the health care industry.

After objectively considering the facts of your situation it is considered that the transaction represented by the Agreement was entered into, and the profit was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction.'

Indeed, as per Cooling, it is considered that the:

…transaction entered into…was a commercial transaction; it formed part of the business activity of the firm and a not insignificant purpose of it was the obtaining of a commercial profit by way of the incentive payment.

By entering into the Agreement and receiving a lump sum of $XXX,XXX which is directly related to your business of operating a medical practice, it is considered that the transaction meets the requirements of paragraph 6 of TR 92/3 as a gain or profit arising from an isolated transaction, and that this gain was not made outside the ordinary course of your business.

It is viewed that the principles in Cooling apply to your factual circumstances even though you have not entered into a lease for a fixed price. Company A is providing you a place to operate your medical practice and administrative services, in return for you assigning a specified percentage of the fees you charge. Both, charging fees to patients and paying expenses such as lease and administrative fees, are revenue and not capital in nature.

We view that your intention or purpose in entering into the transaction was to make a profit or gain from your agreement to operate your medical practice and provide the services of X in the clinic provided by Company A, including a profit or gain through the receipt of the lump sum payment.

Even though this is an isolated commercial transaction, our position is that the facts indicate a profit making intention or purpose, and the transaction was entered into in the course of carrying on your business.

Capital gains tax

CGT event D1 occurs, under section 104-35 of the ITAA 1997, if an entity creates a contractual right or other legal or equitable right in another entity. The section includes an example of the entering into a contract with the purchaser of the entity's business not to operate a similar business in the same town.

Taxation Ruling TR 95/3 (TR 95/3) outlines the ATO view on the taxation treatment of consideration received for entering into a restrictive covenant. Although the Ruling relates to former subsections 160M(6) (now section 104-35 of the ITAA 1997) and 160M(7) (now section 104-155 of the ITAA 1997) of the Income Tax Assessment Act 1936, the principles still apply to the rewritten provisions.

Paragraphs 17-19 of TR 95/3 provide as follows:

17. Again, if a restrictive covenant relates both to a current period of employment and to a period after the end of that employment, the portion of the consideration received that relates to the period of employment is assessable under subsection 25(1) or paragraph 26(e). That portion also comes within the new subsection 160M(6) (with the new subsection 160M(7) as a backup) if the restrictive covenant was entered into on or after 26 June 1992. However, the application of the new subsection 160M(7) requires that there is an existing asset at the time of entry into the covenant - e.g. trade secrets, trade connections or goodwill of value. Subsection 160ZA(4) applies to reduce any capital gain to the extent that the amount is assessable as ordinary income.

18. The portion of the consideration that relates to the period after the end of the employment is assessable under the new subsection 160M(6).

19. If the contract does not apportion the payment, the amount reasonably attributable to the period of employment needs to be estimated by the parties to the contract, according to the terms of the contract and any other relevant facts. If it is not possible to make any reasonable apportionment, the whole amount is assessable under the new subsection 160M(6) if the restrictive covenant was entered into on or after 26 June 1992.

A capital gain will arise on CGT event D1 happening if the capital proceeds from creating the right are more than the incidental costs you incurred that relate to the event. You can make a capital loss if those capital proceeds are less (subsection 104-35(3) of the ITAA 1997).

However, where a transaction gives rise to both ordinary income and a capital gain for capital gains tax (CGT) purposes, the anti-overlap provisions in section 118-20 of the ITAA 1997 would operate to reduce any capital gain arising as a result of relevant CGT events by the amount of income assessed under section 6-5 of the ITAA 1997.

Application to your situation

The following statements have been made in the ruling:

…Among other things, the contract provided for Client 2 and Client 1 to commit to continue to work at the practice for a X year term and to agree to a restraint of trade clause…

The lump sum is capital in nature and is a payment for the goodwill of Client 1 and Client 2. It is also a payment for entering into the Restraint of Trade clause in the contract for which provides that Clients 1 and 2 cannot operate a medical practice within X km of the clinic during the term of the contract or for a period of X months after the contract ceases.

The terms of the Agreement outlines that both you and X agreed that you would not render medical services within a specified distance of Company A's medical clinic during the fixed term of the Agreement, and for a specified period after the Agreement terminates.

It is also considered that the restraints during the fixed term period would be 'an obligation undertaken incidentally to the carrying on of a business'. Under the terms of the Agreement, you have positive obligations to:

● work a minimum of 45 hours per week at Company A's medical clinic for a specified minimum number of weeks per year; and

● use all reasonable endeavours to grow and promote the medical practice.

It therefore follows that the restraints relating to the period of the fixed term agreement are merely a natural consequence of, and an obligation incidental to, these positive obligations under the Agreement. As such, they are income in nature.

In relation to the restraints during the specified period after the termination of the Agreement, it is considered that, due to the operation of the terms of the Agreement, no amount of the lump sum can be attributed to this aspect of the restraints.

As the payment under the Agreement is not solely for the restraints you agreed to both during the period of the Agreement and for a short period after it ended, it is considered that the principles set out in TR 95/3 do not apply in this case.

The restraints follow as a natural consequence of the positive obligations of you to operate your medical practice and provide X's full-time services for Company A for the specified period. As such, it is considered that no part of the payment made relates specifically to the restraints. That is, the payment is prime facie an inducement paid to you in order to secure the operation of your medical practice for a period of five years.

Even if part of the payment was considered to be in respect of the restraint after the Agreement ceased, it is not possible to apportion the amount attributable to that restraint as the payment under the Agreement is a lump sum and there is no evidence that there was any separate bargaining/negotiation regarding that restraint.

In addition, even if part of the payment was found to be legitimately referable to the restraints in the terms of the Agreement, it is still considered that the entire lump sum payment is assessable as income under section 6-5 of the ITAA 1997 because:

● the restraints are ancillary in nature to the main purpose of the Agreement, which is to engage you to operate your medical practice and provide the services of X to work in a Company A medical clinic for a fixed period; and

● the restraints are of a 'very limited or partial character' and do not 'take a substantial piece out of the ordinary scope of the business activities' for you, such that they are not taken out of section 6-5 of the ITAA 1997. The restraints relate to a very small area for only a short period of time. The restraint does not prevent you from operating your medical practice outside of the exclusion zone in the specified period after the Agreement has been terminated.

Furthermore, under the Agreement, you are required to repay an amount of $X,XXX (plus GST) for each whole month remaining until the term of the expiry of the fixed term of service under the Agreement if Company A terminates the Agreement in accordance with its terms, or you breach the Agreement. This means that if the Agreement was terminated in the first month, you would be required to pay back the whole of the payment, being $XXX,XXX. This further indicates that no amount paid under the Agreement is attributable to the restraint after the Agreement ends.

As outlined above, we consider that the true nature of the lump sum payment in this case is that of an inducement for you to enter into the fixed term agreement, and the payment is not actually referable to the restraints in the terms of the Agreement. As such, there is no CGT event D1 and therefore no capital gain and we consider the payment to be ordinary assessable income.

Question 2

Will you be able to access the small business concessions under Division 152 of the ITAA 1997?

Summary

It has been determined that the $XXX,XXX lump sum payment will be assessable as ordinary income. Therefore, as there is no assessable capital gain you will not be eligible to the capital gains tax small business concessions.

Detailed reasoning

Small business CGT concessions

As it is considered that there is no capital gain assessable in respect of the lump sum payment, there is no need to address whether you are eligible to access the small business CGT concessions. However, for the sake of completeness, the following comments are offered.

Under Division 152 of the ITAA 1997 capital gains can be reduced, if certain conditions are met, by various concessions for small businesses.

In relation to CGT event D1, the following conditions must be met:

a) A CGT event has occurred which (apart from Division 152) would have resulted in a capital gain.

b) At least one of the following applies:

(i) the taxpayer is a small business entity for the income year

(ii) the taxpayer satisfies the maximum net asset value test

(iii) the taxpayer is a partner in a partnership that is a small business entity for the income year and the CGT asset is an interest in an asset of the partnership.

c) The right created that triggers the CGT event must be inherently connected with a CGT asset of the taxpayer's that satisfies the active asset test.

Section 152-40 of the ITAA 1997 provides the meaning of an 'active asset'. Relevant to the present case, a CGT asset which is an intangible asset is an 'active asset' if the taxpayer owns the asset and it is inherently connected with a business that is carried on by the taxpayer, such as goodwill.

The leading authority on the definition of goodwill is the majority judgement of the Commissioner of Taxation (Cth) v Murry [1998] HCA 42 (Murry), Gaudron, McHugh, Gummow and Hayne JJ at paragraph 4:

Section 160A defines “asset'' to include “goodwill'', but neither Pt IIIA nor the Act generally attempts to give any special meaning to the term. Goodwill is inseparable from the conduct of a business. It may derive from identifiable assets of a business, but it is an indivisible item of property, and it is an asset that is legally distinct from the sources - including other assets of the business - that have created the goodwill. Because that is so, goodwill does not inhere in the identifiable assets of a business, and the sale of an asset which is a source of goodwill, separate from the business itself, does not involve any disposition of the goodwill of the business.

The ATO's view on the definition of goodwill is found at paragraph 12 of Taxation Ruling TR 1999/16 adopting the principles of Murry:

….goodwill is the product of combining and using the tangible, intangible and human assets of a business for such purposes and in such ways that custom is drawn to it. The attraction of custom is central to the legal concept of goodwill. Goodwill is a quality or attribute that derives among other things from using or applying other assets of a business. It may be site, personality, service, price or habit that obtains custom. It is more accurate to refer to goodwill as having sources than it is to refer to it as being composed of elements. Goodwill is a composite thing. It is one whole. It is indivisible item of property that is legally distinct from the sources from which it emanates. It is something that attaches to a business and is inseparable from the conduct of a business. It cannot be dealt with separately from the business with which it is associated.

Application to your situation

The following statements were made in the ruling:

The lump sum is capital in nature and is a payment for the goodwill of Client 1 and Client 2…

Client 1 is an experienced GP who is also an examiner with the XXXXX. He has a considerable patient base constituting goodwill.

It is not accepted that the entering into of the Agreement resulted in CGT event D1 happening. However, if it did then it is considered that you did not dispose of any goodwill under this Agreement.

In this case, you had contracted with Company for a fixed period of time and have now entered into a new contract under the Agreement. There was no disposal of goodwill, being the right to conduct a business in substantially the same manner and by the same means conducted previously by you.

The right to conduct a medical practice remained with you and Company A acquired no right to carry on that business as a result of the contractual arranged entered into with you. As such, you were unable to sell the goodwill of a business that was yours and then continue to conduct that business after its sale.

The Agreement did not provide for X to act as an employee in a business that has been acquired by Company A, nor is it indicated that the relevant business is to be carried on by Company A rather than by you.

Further, it is not clear the extent to which goodwill actually forms part of the assets of your business and there is no indication in the Agreement that you or X could retain patients secured through Company A at the termination of the Agreement.

Based on the Murry case, the professional reputation of X (personal goodwill) is not capable of disposition as an element of goodwill separately from the right to conduct the business. Professional reputation is also not property capable of disposition in its own right.

If we were required to consider the small business CGT concessions, we could not do so, as we do not currently possess enough information to be satisfied that your business assets include goodwill which clearly satisfies the active asset test, and with which a capital gain from CGT event D1 could be 'inherently connected', such that you could apply the small business CGT concessions to any such gain.

Conclusion

After considering the facts of your situation we have concluded the following:

1. The $XXX,XXX lump sum payment is an inducement for you to renew your contract with Company A to operate your medical practice at the medical facilities provided by Company A;

2. The $XXX,XXX is assessable to you as ordinary assessable income pursuant to section 6-5 of the ITAA 1997;

3. The $XXX,XXX is assessable to you for the year ended 30 June 20YY; and

4. No portion of the $XXX,XXX lump sum payment represents a restrictive covenant.

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