Edited version of private advice

Authorisation Number: 1052031418314

Date of advice: 8 September 2022

Ruling

Subject: Lump sum - insurance injury benefit

Question

Is the Specific Injury Benefit lump sum payment claimed through Salary Continuance Insurance included in your assessable income?

Answer

No. The payment does not have the characteristics of ordinary income as it was not earned by you and did not relate to services performed. The payment is also a one-off payment and does not have an element of recurrence or regularity. Additionally, as your claim was for personal injury, it is not statutory income as any capital gain is disregarded under section 118-37 of the Income Tax Assessment Act 1997 (ITAA 1997) which provides an exemption for compensation received for any wrong, injury or illness you suffer personally. Consequently, no part of the amount you received is included in your assessable income.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Your employer provides Salary Continuance Insurance as an employment benefit to its employees including you.

This insurance includes a Specific Injury Benefit. This is a lump sum payment for certain injuries, paid immediately and regardless of whether you need to take any time off work.

You suffered an injury and made a claim against this insurance.

The claim was accepted by the insurer and a lump sum payment was made by the insurer.

You took time off work due to the injury. This was covered by your personal leave allowance. You did not lose any income due to the injury and the insurance payment was not a replacement for lost income.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Income Tax Assessment Act 1997 subsection 6-15(1)

Income Tax Assessment Act 1997 section 118-37