Private ruling: Subject - Lump sum compensation payment
Date of advice: 30 June 2017
Published: November 2017
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the lump sum payment you are to receive under a Deed of Settlement and Release, assessable as ordinary income or as a capital gain? | A1: No.

Relevant facts and circumstances: You suffered a degree of permanent impairment arising from your employment. You lodged a claim and the claim was accepted. A dispute arose and you lodged an application for review. The lump sum you have been offered under the Deed of Settlement and Release was made in respect of the nature and extent of the injury.

Relevant legislative provisions: Income Tax Assessment Act section 6-5 | Income Tax Assessment Act section 6-10 | Income Tax Assessment Act section 104-25 | Income Tax Assessment Act subparagraph 118 37(1)(a)(i)

Reasons for decision: Summary: You have sustained a degree of permanent impairment due to a workplace injury. The settlement is a result of you exercising your right to review and entering into a release agreement for the purposes of surrendering you rights. The payment is not assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) and any capital gain will be disregarded under the capital gains tax provisions as it is a payment is in relation to compensation or damages received for any wrong or injury you suffer in your occupation.