Private ruling: Lump Sum In Arrears Tax Offset
Date of advice: 7 August 2017
Published: November 2017
Ruling period: Year ended 30 June 201A | Year ended 30 June 201B | Year ended 30 June 201C
Date scheme commenced: 1 July 201D

Ruling: Q1: Is the payment you received in the 201C financial year, which was accrued/applicable to the 201A and 201B financial years, eligible income for the purpose of calculating the lump sum in arrears (LSIA) tax offset? | A1: Yes Subsection 159ZR(1) of the Income Tax Assessment Act 1936 (ITAA 1936) defines an 'eligible lump sum' as a lump sum payment of eligible income received on or after 1 July 1986 that is included in the assessable income of the taxpayer and accrued, in whole or in part, in an earlier year or years of income. Eligible income is defined in that subsection to include income by way of compensation or sickness or accident pay that is: ● in respect of an incapacity for work ● calculated at a weekly or other periodical rate, and ● is not a payment made under an insurance policy to the policy owner. In your case, you received payments under an insurance policy owned by your Superannuation fund, calculated monthly, because you were unable to work for a period of time. Therefore, the payments you received that accrued in earlier years of income meet the definition of a lump sum payment in arrears.

Relevant facts and circumstances: You received an amount in the 201C financial year covering the period of August 201D to August 201B from an Income Protection Claim with a Superannuation fund paid by an Insurer. Your benefit was calculated monthly. These amounts are shown on the Gross Payments label on your PAYG Payment Summary. The insurance policy was owned by the Superannuation fund.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) and | Income Tax Assessment Act 1936 Subsection 159ZR(1).