Private ruling: Lump sum compensation payment made pursuant to the Return to Work Act 2014 (South Australia) (RWA)
Date of advice: 16 September 2019
Published: November 2019
Ruling period: Year ended 30 June 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Should the amount of $X or any portion thereof to be paid pursuant to section 33 and paragraph 54(1)(a) of the RWA be included in your assessable income? | A1: No. The lump sum payment has been received as compensation for a 'wrong or injury you have suffered in your occupation'. It bares none of the characteristics of ordinary income as it lacks any element of periodicity, recurrence or regularity, and nor is it paid to compensate for loss of income. Additionally, it does not satisfy all of the conditions set out in section 82-130 of the Income Tax Assessment Act 1997 (ITAA 1997) to be an Employment Termination Payment. Therefore, the lump sum is capital in nature and will not be assessable as the capital gain is disregarded under subparagraph 118-37(1)(a)(i) of the ITAA 1997 as the CGT event is in relation to compensation or damages received for any wrong or injury you suffered in your occupation.

Relevant facts and circumstances: During your employment you sustained a workplace injury. You have accepted a redemption offer pursuant to section 33 and paragraph 54(1)(a) of the RWA to the value of $X.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5, | Income Tax Assessment Act 1997 Section 6-10, | Income Tax Assessment Act 1997 Section 15-30, | Income Tax Assessment Act 1997 Section 104-25, and | Income Tax Assessment Act 1997 Subparagraph 118-37(1)(a)(i).