| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051557203214
Date of advice: 30 July 2019
Ruling
Subject: Trauma benefit payment - not assessable income
Question
Is the amount you received as trauma benefit assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No, having considered your circumstances and the relevant factors, the Trauma Recovery Benefit payment you received is not considered ordinary income under section 6-5 of the ITAA 1997 and therefore is not assessable. The payment was for a defined period following the diagnosis of your condition and it was not received to replace lost earnings.
This ruling applies for the following period:
Year ended 30 June 2018
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You were diagnosed with an illness in 20XX.
Your employer has a plan held with Insurer A. You made a claim under this plan and you were paid a trauma benefit over several payments in 20XX. Tax was withheld from the payment and Insurer A issued you with a PAYG payment summary.
You used your sick leave whilst you were off work receiving treatment. You returned to work before the six month off work required to receive salary continuance benefit expired and your claim was closed.
You provided a copy of the payment letter, the payment summary and the product disclosure statement (PDS).
The PDS states:
'We will pay you the monthly benefit if a trauma recovery event happens to the insured member...This benefit is payable whether or not the insured member is disabled.'
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
