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Edited version of private advice
Authorisation Number: 1051520428770
Date of advice: 23 May 2019
Ruling
Subject: Lump sum compensation payment
Question 1
Will the lump sum payment you received as a retraining allowance, be included in your assessable income?
Answer
No.
Question 2
Will the lump sum payment or any portion thereof to be paid pursuant to section 33 and paragraph 54(1)(a) of the Return to Work Act 2014 (SA), be included in your assessable income?
Answer
No.
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) deals with receipts of ordinary income. It does not operate to include in assessable income amounts of a capital nature. The money to be received will be capital in nature and therefore not assessable income.
Additionally, as the criteria in subsection 82-135(i) of the ITAA 1997 is satisfied the payment is excluded from being an Eligible Termination Payment.
The other applicable sections, section 15-30 of the ITAA 1997 and the capital gains tax provisions of the ITAA 1997, also will not operate to make the payment assessable.
Therefore the compensation lump sum payment you receive will not be included in your assessable income.
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You sustained compensable disabilities said to have arisen from your employment.
You will receive a redemption offer pursuant to section 33 and paragraph 54(1)(a) of the Return to Work Act 2014 (SA).
It was also found that you were entitled to a retraining allowance.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 15-30
Income Tax Assessment Act 1997 section 118-37