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Edited version of your written advice
Authorisation Number: 1012904545257
Date of advice: 30 October 2015
Ruling
Subject: Assessability of insurance payment
Question
Are the monthly insurance payments you received assessable income?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 20XX
Year ended 30 June 20YY
The scheme commences on
1 July 2013
Relevant facts and circumstances
You were a volunteer.
You were injured in carrying out your volunteer duties.
The organisation hold a Group Personal Accident Voluntary Workers Policy ('the Policy') which covered specific events referred to as 'insured events'.
You received monthly payments under the Policy. You were paid under insured event 20 - temporary total disablement caused directly and solely by injury. The compensation paid for this event is a percentage of your gross weekly salary.
You received payments in the financial years ended 30 June 20XX and 30 June 20YY.
Relevant legislative provisions
Income tax Assessment Act 1997 section 6-5
Reasons for decision
The assessable income of an Australian resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Ordinary income is income according to ordinary concepts which is not specifically defined in the legislation.
However, characteristics of ordinary income that have evolved from case law include receipts that:
• are earned
• are expected
• are relied upon, and
• have an element of periodicity, recurrence or regularity.
Payment for personal services, whether received in the capacity of an employee or otherwise in connection with employment or other personal services income is income according to ordinary concepts. Similarly, any payment (for example compensation) to replace income is also considered to be income for ordinary concepts.
The payments you received under the policy were paid in substitution of your 85% of your gross salary. As salary is a payment for personal services, and forms assessable income, the compensation payments will also form part of your assessable income.