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Edited version of private advice
Authorisation Number: 1051930639516
Date of advice: 8 December 2021
Ruling
Subject: Victims of crime compensation payment
Question
Is the victim of crime lump sum payment you received under the relevant State legislation assessable income?
Answer
No.
For income tax purposes, an amount paid to compensate for a loss generally acquires the character of that for which it is substituted. You received compensation for personal injury, it was not received for loss of income. Therefore, the amount you received was a capital amount. However, for capital gains tax purposes, paragraph 118-37(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) disregards compensation amounts a person receives for any personal wrong, injury or illness. In your case, the payment was made to you as compensation for personal injury and is exempt from capital gains tax under paragraph 118-37(1)(a) of the ITAA 1997.
This ruling applies for the following period:
Income year ended 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
You received criminal compensation from the state government.
Relevant legislative provisions
Income Tax Assessment Act 1997 paragraph 118-37(1)(a)