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Edited version of your written advice
Authorisation Number: 1012709856322
Ruling
Subject: Assessability of income
Question
Is the Disability Income Crisis Recovery Benefit payment you received assessable?
Answer
No.
This ruling applies for the following period
Year ending 30 June 2015
The scheme commenced on
1 July 2014
Relevant facts
You hold an income protection policy which has Crisis Recover standalone component.
As the result of a medical crisis, you received a lump sum payment under the crisis component.
None of the payment related to income protection.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 6-10
Reasons for decision
The assessable income of an Australian resident includes ordinary income and statutory income derived directly or indirectly from all sources, in or out of Australia, during the income year (subsection 6-5(2) and subsection 6-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997)).
Ordinary income is not clearly defined in the legislation and therefore the courts have identified a number of factors that indicate whether an amount has the character of income according to ordinary concepts.
It has been determined that a frequent characteristic of income receipts is an element of periodicity, recurrence or regularity (Federal Commissioner of Taxation v. Dixon (1952) CLR 540; (1952) 10 ATD 82). Other characteristics of income that have evolved from case law also include receipts that:
• are earned
• are expected, and
• are relied upon.
Statutory income is not ordinary income but is included in assessable income by a specific provision in the tax legislation (subsection 6-10(2) of the ITAA 1997).
In your case, the payment you received is not ordinary income and is not statutory income.
Therefore, the money you received is not assessable.