Private ruling: Repaid income
Published: July 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to reduce your assessable income by the relevant repaid amounts? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 - Section 8-1. | Income Tax Assessment Act 1997 - Section 6-5. | Income Tax Assessment Act 1997 - Section 59-30

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Your benefits are regarded as ordinary income and therefore assessable under subsection 6-5(2) of the ITAA 1997. You have now repaid some of these benefits following your CTP settlement. Section 59-30 of the ITAA 1997 states that an amount you receive is not assessable and is not exempt income for an income year if: (a) you must repay it; and (b) you repay it in a later income year; and (c) you cannot deduct the repayment for any income year. However, subsection 59-30(3) of the ITAA 1997 states this section does not apply to an amount you must repay because you received a lump sum as compensation or damages for a wrong or injury suffered in your occupation. In your case, the CTP benefits were not received for a wrong or injury you suffered in your occupation. Therefore subsection 59-30(3) of the ITAA 1997 is not relevant in your circumstances. The repaid amount is not assessable and not exempt income under section 59-30 of the ITAA 1997. You have repaid the amount in the 20XX income year. Therefore the relevant amounts should be removed from your assessable income in the relevant income years.

Relevant facts: You were involved in a car accident on your way to work. | While off work, you received payments for loss of income. | You received benefits in the relevant income years. | You declared benefits received for the relevant income year in your relevant tax return. | You have not yet lodged your subsequent tax return. | After receiving your payment from your CTP claim, you were required to pay back some of your loss of income benefits. You paid this amount in the subsequent year.