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Edited version of your written advice
Authorisation Number: 1051358358796
Date of advice: 10 April 2018
Ruling
Subject: Total and Permanent Disability (TPD) benefit payment
Question
Is the lump sum payout you received from a Total Permanent Disability (TPD) benefit assessable in the 2017-18 income year?
Answer
No
Having considered your circumstances and the relevant factors, the TPD lump sum payment you received is not considered ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) and therefore is not assessable. The payment was for your condition or for your loss of earning capacity caused by your condition and it was not received to replace lost earnings.
This ruling applies for the following period
1 July 2017 to 30 June 2018
The scheme commenced on
1 July 2017
Relevant facts
You are an Australian resident for tax purposes and you received a TPD benefit payment.
The TPD cover was under your personal name and not related to your superannuation or a business.
The sum insured was not calculated in accordance with your income. It was a lump sum you chose and it was indexed every year. The TPD benefit was to be paid if a specific event occurred (in your case when you meet the TPD definition).
You have a separate cover for your income protection with the same insurer.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5