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Edited version of private advice
Authorisation Number: 1051620008065
Date of advice: 12 December 2019
Ruling
Subject: Lump sum payment paid 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 RWA or for the purpose of retraining, 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, 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 ending 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
· You were employed.
· You sustained an injury due to a workplace.
· You were offered a lump sum amount pursuant to section 33 and paragraph 54(1)(a) of RWA.
· You were also offered lump sum amount for retraining.
· You accepted the offer.
· In acceptance of the offer, you were required to resign.
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