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Edited version of private advice
Authorisation Number: 1051647928411
Date of advice: 19 March 2020
Ruling
Subject: Workers compensation payments
Question
Are the regular ongoing workers compensation payments you receive assessable income in Australia?
Answer
No. The compensation payments you continue to receive are not considered assessable income for taxation purposes in Australia. This is because the Double taxation agreement provides that pensions paid to a resident of a contracting state shall be taxable only in that state. Therefore pensions paid from Australia to an individual who is a resident of Country A shall be taxable only in Country A.
It is considered under that the payments you receive are a 'pension' in accordance with Article 17(1) and therefore, the Pension Article applies to give Country A, as the country of residence of the taxpayer, sole taxing rights over the compensation payments. For this reason the payments are not assessable income in Australia.
This ruling applies for the following periods:
Year ended 30 June 2021
Year ended 30 June 2022
Year ended 30 June 2023
Year ended 30 June 2024
Year ended 30 June 2025
The scheme commences on:
1 July 2020
Relevant facts and circumstances
You moved overseas after you were medically discharged.
You received workers compensation payments.
Your weekly workers compensation incapacity payments ceased because you left Australia.
You won the right to have your fortnightly compensation payments reinstated and back dated to the date the payments ceased.
You are currently receiving workers compensation payments.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 6-5(3)
International Tax Agreements Act 1953 Schedule 1
International Tax Agreements Act 1953 Schedule 1, Article 3(3)
International Tax Agreements Act 1953 Schedule 1, Article 17
International Tax Agreements Act 1953 Schedule 1, Article 17(1)