Private ruling: Income
Published: April 2012

Ruling: Is the lump sum payment you received assessable in the 2007-08, 2008-09 and 2009-10 financial years? | No. | Is the lump sum payment you received assessable in the year ended 30 June 2010? | Yes. | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | 1 July 2007 | You received a lump sum payment in March 2010 from which tax was withheld. | This payment was paid under an income protection policy for lost salary and wages for the period from mid 2007 to mid 2009 when you were disabled. | Income Tax Assessment Act 1997 Section 6-5. | Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. | Salary and wages income is regarded as ordinary income. Similarly, back payments for salary and wages are also regarded as ordinary income and therefore assessable under subsection 6-5(2) of the ITAA 1997. | Taxation Ruling TR 98/1 sets out the Commissioner's policy on the derivation of income. Paragraph 42 of the ruling states that income from employment would normally be assessable on a receipts basis. Salary, wages or other employment remuneration are assessable on receipt even though they relate to a past or future income period. | Therefore, this payment is assessable to you in the 2009-10 financial year, as this is the year you received the payment.




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