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Edited version of private advice
Authorisation Number: 1051690232359
Date of advice: 1 June 2020
Ruling
Subject: Income - assessable - crisis benefit payment
Question:
Is the crisis benefit payment assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer:
No. Based on the information provided it is viewed that the crisis benefit payment you received under the income protection policy is not ordinary income and is not statutory income. Therefore, it is not assessable income.
Question 2:
Is the crisis benefit payment exempt from capital gains tax under section 118-37 of the ITAA 1997?
Answer:
Yes. Based on the information provided the crisis benefit payment was received by you as compensation for a medical illness you suffered personally. Therefore, any capital gain or capital loss in relation to the payment amount is disregarded.
This ruling applies for the following period
Income year ending 30 June 2020
The scheme commences on
1 July 2019.
Relevant facts and circumstances
You held an income protection policy (the Policy) which included a number of optional benefits, including crisis benefits.
The terms of the Policy outlined that crisis benefits payments would be made on a monthly basis for a specific period if the insured person suffered from a specified crisis event, including specified medical conditions, whether or not they were able to return to work.
You received a crisis benefit payment under the Policy after you had been diagnosed with one of the specified medical conditions and had lodged a claim with your insurer.
Your claim has been closed and you do not expect to receive any further payment/s in relation to the claim in the future.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 6-10
Income Tax Assessment Act 1997 Section 6-15
Income Tax Assessment Act 1997 Section 102-5
Income Tax Assessment Act 1997 Section 118-37
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