Private ruling: Lump sum payments – Personal Injury
Date of advice: 16 January 2019
Published: April 2019
Ruling period: Period ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are the lump sum payments that you received assessable income? | A1: No. The lump sum payments you received in settlement of your claims are not considered ordinary income. Also, they are not statutory income as any capital gain is disregarded under paragraph 118-37 of the Income Tax Assessment Act 1997 (ITAA 1997) which provides an exemption for compensation received for any wrong, injury or illness you or your relative suffers personally. Subsection 6-15(1) of the ITAA 1997 provides that if an amount is not ordinary or statutory income it is not assessable income. Consequently no part of the amounts you received is included in your assessable income.

Relevant facts and circumstances: You signed an Authority for Settlement in relation to your claim for damages resulting from a motor vehicle accident involving your spouse. You received a lump sum payment in settlement of your personal injury damages claim. You received a lump sum payment in settlement of your claim for damages for dependency pursuant to the Fatal Accidents Act 1959 .

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 118-37 | Income Tax Assessment Act 1997 subsection 6-15(1)