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Edited version of private advice
Authorisation Number: 1051925446747
Date of advice: 26 November 2021
Ruling
Subject: Assessable income - crisis benefit
Question 1
Is the Payment assessable under section 6-5 or section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No. The Payment you received under the Policy is not ordinary income under the ordinary concepts and will not be assessable under section 6-5 of the ITAA 1997. Additionally, the Payment is not related to your employment and is therefore not assessable under section 15-2 of the ITAA 1997.
Question 2
Is the Payment exempt from capital gains tax under section 118-37 of the ITAA 1997?
Answer
Yes. The Payment was received by you as compensation for an injury you personally suffered that was covered under the Policy. The Payment is capital in nature, however any capital gain or capital loss in relation to it is disregarded under section 118-37 of the ITAA 1997.
This ruling applies for the following period:
Income year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You were a salaried employee of Company X.
Company X is the owner of an insurance policy (the Policy) which covers its employees for income replacement benefits. The Policy also had extra benefits for specified injuries/health issues which were calculated at specified percentages of the insured person's income, with specified payment periods. All Company X's employees are automatically covered by the Policy.
You did not pay any fee or premium to be an insured member of the Policy with your employer paying a quarterly premium to the insurer to cover all eligible employees.
You are an insured person and a beneficial holder of the Policy.
You injured yourself and Company X made a claim on your behalf with the insurer in relation to one of the extra benefits included in the Policy.
The insurer approved your claim and made a payment (the Payment) to Company X on your behalf.
Company X paid you for several days sick leave and ordinary pay during the remaining period included in the specified payment period for the benefit you had made the claim.
Company X issued a payslip for the period covered by the payment period applicable to the Payment, including the Payment in your gross income and withholding tax.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 6-15
Income Tax Assessment Act 1997 Section 15-2
Income Tax Assessment Act 1997 Section 102-5
Income Tax Assessment Act 1997 Section 118-37