Private ruling: Compensation payment - breach of privacy
Date of advice: 29 May 2020
Published: July 2020
Ruling period: Financial year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the compensation payment you received included in your assessable income? | A1: No. The lump sum payment received was not earned by you as it does not relate to any services performed. It also lacks any element of periodicity, recurrence or regularity, nor is it paid to compensate for a loss of income. As such the lump sum payment is not ordinary income. In addition, any capital gain you made is disregarded. As the payment is not ordinary income or statutory income it is not included in your assessable income. For more information see Taxation Ruling 95/35 Income tax: capital gains: treatment of compensation receipts which is available in the legal database on ato.gov.au . | Q2: Does Goods and Service Tax (GST) apply to the amount received? | A2: No. You have not made a taxable supply for consideration in the course or furtherance of an enterprise you carry on, as defined in section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 . Therefore, GST does not apply to the amount received.

Relevant facts and circumstances: You notified X of your change of address. X did not update their records and your private residential address continued to be sent to your clients. You lodged a complaint for breach of privacy. You and X executed a Deed of Release (Deed) to resolve your complaint. Under the terms of the Deed X paid you $Z in full and final satisfaction of any matters arising from the complaint. Clause 12 of the Deed provides: 12 GST a) The Settlement Sum is an out of court settlement. b) The Settlement Sum is not a taxable supply and it not subject to GST. c) If GST is assessed by the Australian Taxation Office pursuant to A New Tax System (Goods and Services Tax) Act 1999 (Cth) to be due and payable, the Settlement Sum includes GST and will not be increased for any GST payable on any supply between the parties.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 118-37 | A New Tax System (Goods and Services Tax) Act 1999 section 9-5