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Edited version of your written advice
Authorisation Number: 1051368458429
Date of advice: 2 May 2018
Ruling
Subject: Assessability of your lump sum compensation payment
Question 1
Will the amount or any portion thereof to be paid pursuant to section 33 and paragraph 54(1)(a) of the Return to Work Act 2014 (SA), be included in your assessable income?
Answer
No.
Question 2
Will the amount or any portion thereof paid as a retraining allowance be included in your assessable income?
Answer
No.
This ruling applies for the following period
Year ended 30 June 20XX.
The scheme commenced on
Relevant facts
You sustained compensable disabilities said to have arisen from your employment.
You will receive a redemption offer pursuant to section 33 and paragraph 54(1)(a) of the Return to Work Act 2014 (SA).
You are also entitled to a retraining allowance in the sum of $XXXX.
You are aware that the payment made for weekly payments pursuant to section 53 of the RWA is assessable as ordinary income as per Taxation Determination TD 2016/18 Income tax: is a redemption payment received by a worker under the Return to Work Act 2014 (SA) assessable income of the worker?
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 15-30
Income Tax Assessment Act 1997 Section 118-37
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) deals with receipts of ordinary income. It does not operate to include in assessable income amounts of a capital nature. The money to be received will be capital in nature and therefore not assessable income.
The other applicable sections, section 15-30 of the ITAA 1997 and the capital gains tax provisions of the ITAA 1997, also will not operate to make the payment assessable.
Retraining allowance
This portion of the lump sum is not a compensation payment and has not been paid for loss of earnings nor will it recur in the future.
The payment is a contribution towards a private expense and is not included in your assessable income.
Therefore the payment you receive will not be included in your assessable income.
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