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Edited version of private advice
Authorisation Number: 1051534163666
Date of advice: 26 July 2019
Ruling
Subject: Lump sum compensation payment made pursuant to the Return to Work Act 2014 (South Australia) (RWA).
Question 1
Will the amount or any portion thereof to be paid pursuant to section 33 and paragraph 54(1)(a) of the Return to Work Act 2014 (SA) (RWA) 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 payment you receive will not be included in your assessable income.
Question 2
Will the amount or any portion thereof to be paid for retraining purposes be included in your assessable income?
Answer
No.
This portion of the lump sum is not a compensation payment and has not been paid for loss of earnings nor will it recur in the future.
The payment is a contribution towards a private expense and is not 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 were employed.
You sustained an injury early 20xx (the first claim).
You lodged a claim for workers compensation in early 20xx which was accepted (the first determination).
You sustained another injury early 20xx (the second claim).
You lodged a second claim for workers compensation in early 20xx which was rejected (the second determination).
You lodged an application for review with the Relevant Employment Tribunal (XXET).
You and your previous employer agreed to resolve the XXET proceedings on the basis of the Consent Minutes of Order filed in the XXET Proceedings.
As part of the agreement you resigned from your employment.
You were offered compensation of medical expenses, pursuant to section 33 and paragraph 54(1)(a) of the RWA.
You were also offered an amount for retraining purposes.
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