Private ruling: Assessable income
Date of advice: 1 July 2022
Published: October 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the lump sum compensation payment assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 ? | A1: No. The lump sum compensation payment does not have the characteristics of ordinary income and is therefore not assessable as ordinary income in Australia. The capital gains provisions will apply to your circumstances.

Relevant facts and circumstances: You were born in Australia. You left Australia several decades ago to permanently live in Country Z. You were a non-resident of Australia for taxation purposes from that time. A number of years later you received unsuitable financial advice to change super funds. You switched funds based on the advice. Several years later you came back to Australia temporarily to work and your spouse remained in Country Z. You returned to Country Z several years later. You and your spouse purchased a home in Country Z. You returned again to Australia a few years later. While in Australia and an Australian resident for taxation purposes you received a redress payment for the financial advice you received in relation to changing super funds. This payment does not need to be declared in your Country Z tax return. You have provided details of how the payment was calculated. You are currently not working and not receiving a pension.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5