Private ruling: Lump sum compensation
Date of advice: 20 November 2019
Published: February 2020
Ruling period: Year ended 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: A1: No. It is accepted that the lump sum payment you have received is a capital amount that is disregarded under subparagraph 118-37(1)(a)(i) of the Income Tax Assessment Act 1997 (ITAA 1997). | Q1: Is the lump sum payment you received pursuant to section 58 of the RWAassessable? | A2: No. It is accepted that the lump sum payment you have received is a capital amount that is disregarded under subparagraph 118-37(1)(a)(i) of the ITAA 1997.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You sustained permanent impairment said to have arisen from your employment. You made a claim for compensation pursuant to the RWA. In accordance with Part 2 Division 5 section 22 of the RWA you have been assessed as having a percentage of whole person impairment (WPI). Section 56 of the RWA entitles a worker to compensation for economic loss of future earning capacity. Such amounts do not have the character of ordinary income. They are based on a sum prescribed by statute which bears no relationship to the employee's current or former earnings. In contrast, the calculation of weekly payments according to the worker's past and current earnings indicates that they reflect an actual loss of income as opposed to a loss of income earning capacity. Section 58 of the RWA entitles a worker to compensation for non-economic loss by way of a lump sum. The amount received is calculated as a proportion of the prescribed sum for the degree of WPI caused by the work injury. Non-economic loss is defined in the RWA as: · pain and suffering · loss of amenities of life · loss of expectation of life · disfigurement · any other loss or detriment of non-economic nature. Your lump sum payments are as follows: · $XXXX pursuant to section 56 of the RWA . · $XXXX pursuant to section 58 of the RWA .

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6-5(1) | Income Tax Assessment Act 1997 section 102-5 | Income Tax Assessment Act 1997 paragraph 108-5(1)(b) | Income Tax Assessment Act 1997 subparagraph 118-37(1)(a)(i)


Subject: Lump sum compensation: Is the lump sum payment you received pursuant to section 56 of the Return to Work Act 2014 (South Australia) (RWA) assessable?