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Edited version of your written advice
Authorisation Number: 4120046590462
Date of advice: 23 April 2018
Ruling
Subject: Lump sum compensation payment – workplace injury
Question
Is the lump sum compensation payment that you received for pain and suffering damages arising from injuries sustained at work included in your assessable income?
Answer
No. The lump sum payment you received is not ordinary income. While CGT event C2 happened when you entered into the Deed of Release the capital gain you made at that time is disregarded, in accordance with the ATO view contained in Taxation Ruling TR 95/35 Income tax: capital gains: treatment of compensation receipts.
This ruling applies for the following period
Year ended 30 June 2017
The scheme commenced on
1 July 2016
Relevant facts and circumstances
You suffered a workplace injury.
You commenced legal proceedings for the recovery of pain and suffering damages in relation to the injury.
You were offered a settlement sum to resolve the matter.
You accepted the settlement offer and entered into a Deed of Release.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 6-10
Income Tax Assessment Act 1997 section 10-5
Income Tax Assessment Act 1997 section 102-5
Income Tax Assessment Act 1997 subsection 102-5(1)
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 subsection 104-25(1)
Income Tax Assessment Act 1997 subsection 104-25(2)
Income Tax Assessment Act 1997 section 108-5
Income Tax Assessment Act 1997 paragraph 118-37(1)(a)