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Edited version of private advice
Authorisation Number: 1051536984727
Date of advice: 2 July 2019
Ruling
Subject: Lump sum payment
Question
Is the lump sum payment you received under the employer group salary continuance plan as a result of an injury assessable under section 6-5 or section 102-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No
The payment does not have the characteristics of ordinary income; it was not earned by you and did not relate to services performed. The payment is also a one-off payment and does not have an element of recurrence or regularity. The payment was made to you under the employer group salary continuance plan, and as such the payment will be exempt from capital gains tax under paragraph 118-37(1)(b) of the ITAA 1997. Further information can be found by searching 'QC 31936' on ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You are a salaried employee and have recently received a 'specific injury" benefit through your employer group salary continuance plan.
You are not required to pay any fee or premium to be a member of this plan.
Your employer pays a single annual premium to the insurer to cover all eligible employees.
As per the plan rules you have received a lump sum benefit as you suffered a specific injury. The terms to be eligible for the benefit are that an insured member suffers a listed specific injury condition.
There is no requirement for any form of disablement or incapacity to work in your regular occupation.
The benefit was not paid as a replacement for any lost income.
You did not take any time off work other than sick leave.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5,
Income Tax Assessment Act 1997 Section 6-10,
Income Tax Assessment Act 1997 subsection 6-15(1),
Income Tax Assessment Act 1997 section 10-5,
Income Tax Assessment Act 1997 section 102-5, and
Income Tax Assessment Act 1997 Paragraph 118-37(1)(b).
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