Private ruling: Lump sum payment for specific injury
Date of advice: 19 December 2018
Published: April 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Is the lump sum specific injury benefit that you received assessable income? | A1: No. The lump sum payment for your specific injury is not considered ordinary income. Also, it is not statutory income as any capital gain is disregarded under paragraph 118-37(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) which provides an exemption for compensation received for any wrong, injury or illness you suffer 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 amount you received is included in your assessable income.

Relevant facts and circumstances: You were covered by an insurance policy that provides for payment of a lump sum specific injury benefit in the event of an injury of the insured person. The specific injury benefit is payable regardless of whether the insured member is still receiving their normal remuneration from working. You suffered a specific injury as specified under the policy. In the financial year you received a lump sum specific injury benefit amount.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-1(1) | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6-5(1) | Income Tax Assessment Act 1997 section 6-10 | Income Tax Assessment Act 1997 section 10-5 | Income Tax Assessment Act 1997 subsection 6-15(1) | Income Tax Assessment Act 1997 paragraph 118-37(1)(a)