Private ruling: Assessability of a crisis benefit payment
Date of advice: 20 February 2020
Published: April 2020
Ruling period: Income year ending 30 June 20XX | Income year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the crisis benefit payment assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. Based on the information provided it is viewed that the crisis benefit payment you received under the insurance policy is not ordinary income and is not statutory income. Therefore, it is not assessable income. | Q2: Is the crisis benefit payment exempt from capital gains tax under section 118-37 of the ITAA 1997? | A2: Yes. Based on the information provided the crisis benefit payment was received by you as compensation for a medical illness you suffered personally. Therefore, any capital gain or capital loss is disregarded.

Relevant facts and circumstances: You held an income protection policy (the Policy) which included a number of optional benefits, including crisis benefits. The terms of the Policy outlined that crisis benefits payments would be made on a monthly basis for a specific period if the insured person suffered from a specified crisis event, including specified medical conditions, whether or not they were able to return to work. You received a crisis benefit payment under the Policy after you had been diagnosed with one of the specified medical conditions, and had lodged a claim with your insurer.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 6-10 | Income Tax Assessment Act 1997 Section 6-15 | Income Tax Assessment Act 1997 Section 102-5 | Income Tax Assessment Act 1997 Section 118-37