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Edited version of private advice
Authorisation Number: 1052396920895
Date of advice: 19 May 2025
Ruling
Subject: Compensation payment - lump sum
Question 1
Are the regular ongoing workers compensation payments you receive assessable income in Australia?
Answer 1
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 ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
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)