Private ruling: Taxable - lump sum
Date of advice: 17 October 2024
Published: 25 November 2024
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Is the lump sum of $X you received from the State Revenue office (SRO) assessable in the current income year ending 30 June 20XX? | A1: Yes. The SRO has paid you a lump sum amount for the overpayment of land taxes following a reassessment for previous income years. As you were entitled to claim a deduction for the land tax, the lump sum you received from the SRO is an assessable recoupment under subsection 20-20(3) of the Income Tax Assessment Act 1997 (ITAA 1997). Section 20-40 of the ITAA 1997 applies where a taxpayer receives an assessable recoupment of a loss or outgoing that is deductible over several income years in either of the following situations: (1) the assessable recoupment was received in the current year, or (2) the assessable recoupment was received in an earlier income year and there remains a part of the recoupment that has not yet been included in the taxpayer's assessable income by section 20-40 or by a previous recoupment law. Where section 20-40 of the ITAA 1997 applies, the amount to be included in the taxpayer's assessable income for the current year is worked out in accordance with the method statement in subsection 20-40(2) of the ITAA 1997. In your case, the lump sum payment is included in your assessable income for the current income year.

Relevant facts and circumstances: You are an Australian citizen who lives outside of Australia. You own an investment property in the relevant state. You recently became aware that the SRO had identified you incorrectly as an absentee owner for state land tax assessments between 20XX and 20XX. This error has now been rectified by the SRO and you received a refund of $X. • $X allocated towards your 20XX assessment and • $X allocated for years 20XX,20XX, 20XX and 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997section 6-5 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 20-20 | Income Tax Assessment Act 1997 section 20-25 | Income Tax Assessment Act 1997 section 20-30 | Income Tax Assessment Act 1997 section 20-40