Edited version of private advice

Authorisation Number: 1051812752707

Date of advice: 8 March 2021

Ruling

Subject: Income - lump sum payment in arrears offset - eligible income

Question:

Is Amount X considered to be eligible income for the purposes of the lump sum payment in arrears offset?

Answer:

Yes. Based on the information provided, Amount X is viewed as being eligible income in accordance with the definition contained in section 159ZR of the Income Tax Assessment Act 1936 as follows:

'eligible income' means:

...

(b)  salary or wages paid to a person after re-instatement to duty following a period of suspension of the person from duty, to the extent to which the salary or wages accrued during the period of suspension...

This ruling applies for the following period:

1 July 20XX to 30 June 20XX.

Relevant facts and circumstances

Allegations of misconduct were made against you in relation to your employment and you were suspended from your position without pay.

You were dismissed from your position without pay and you commenced legal proceedings to be re-instated in your position with the findings being that:

•         the review of your dismissal was upheld

•         you were to be reinstated to the level you held at the time of your removal from your former employer (the Employer)

•         you were entitled to be paid at the relevant rates from the date of removal to the date of reinstatement, less any sums earned from personal exertion in that period; and

•         your service with the Employer is taken not to be broken.

You made enquiries with the Employer as to why Amount X had not been included as a Lump Sum E payment and they advised that:

•         for each payment accrued more than 12 months before the date of payment and is also greater than $1,200, is to be classified as a Lump Sum E payment which would appear under the appropriate label in your 20XX-20XX Payment Summary

•         they had conducted a review of the payment made to you during the 20XX-XX income year and had identified that you were paid an amount under Lump Sum E category with the breakdown of the amounts included in the total payment amount of $XX,XXX.XX (Amount A) comprising of amounts paid during the 20XX-XX to 20XX-XX income year, which did not include Amount X.

The Employer provided a 20XX Income Statement which included amendments to Amount A, being the original Total Lump Sum E amount, in which Amount A was increased by $XX,XXX.XX (Amount X).

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159ZR

Income Tax Assessment Act 1936 Section 159ZRA

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