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Edited version of private advice
Authorisation Number: 7920151803700
Date of advice: 10 October 2022
Ruling
Subject: Compensation payments
Question 1
Are the payments received assessable statutory income under section 6-10 of the Income Tax Assessment Act 1997 as a capital gain?
Answer
No. The payments are not assessable statutory income under section 6-10 of Income Tax Assessment Act 1997 (ITAA 1997), as they are disregarded under section 118-37(b)(ii) of ITAA 1997.
Question 2
If the payments are distributed to the beneficiaries, are they assessable under section 97 of the Income Tax Assessment Act 1936?
Answer
No. As per question 1, the payments are not income and are therefore not assessable under section 97.
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
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased died in 20XX of XXXX.
The last income tax return lodged for his estate was for 20XX, lodged as a final return.
Since this time, the estate of the deceased has received settlement monies resulting from XXXX related compensation claims against XXXX trust funds which sold XXXX products in Australia.
Relevant legislative provisions
Section 6-10 Income Tax Assessment Act 1997
Section 188-37 Income Tax Assessment Act 1997
Section 97 Income Tax Assessment Act 1936