Private ruling: Workers compensation payments
Published: March 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the amounts or any portion thereof to be paid pursuant to sections 32 or 42 of the Workers Rehabilitation and Compensation Act 1986 (SA) (WRCA), be included in your assessable income? | A1: No

Relevant facts and circumstances: You sustained compensable disabilities said to have arisen from your employment. You will receive a redemption offer in accordance with sections 32 and 42 of the WRCA. As part of your agreement for compensation you must resign.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 15-30 | Income Tax Assessment Act 1997 Subsection 82-135(i) | Income Tax Assessment Act 1997 Section 118-37

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) deals with receipts of ordinary income. It does not operate to include in assessable income amounts of a capital nature. The money to be received will be capital in nature and therefore not ordinary income. Whilst the payment is capital in nature, any capital gain or loss made on receipt of the payment will be disregarded by virtue of section 118-37 of the ITAA 1997. As the criteria in subsection 82-135(i) of the ITAA 1997 is satisfied, the payment is excluded from being an eligible termination payment and section 15-30 of the ITAA 1997 will not apply to make the amount assessable. Therefore the payments you receive will not be included in your assessable income.