Private ruling: Victims of crime compensation payment
Date of advice: 8 December 2021
Published: March 2022
Ruling period: Income year ended 30 June 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Is the victim of crime lump sum payment you received under the relevant State legislation assessable income? | A1: No. For income tax purposes, an amount paid to compensate for a loss generally acquires the character of that for which it is substituted. You received compensation for personal injury, it was not received for loss of income. Therefore, the amount you received was a capital amount. However, for capital gains tax purposes, paragraph 118-37(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) disregards compensation amounts a person receives for any personal wrong, injury or illness. In your case, the payment was made to you as compensation for personal injury and is exempt from capital gains tax under paragraph 118-37(1)(a) of the ITAA 1997.

Relevant facts and circumstances: You received criminal compensation from the state government.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 118-37(1)(a)