CXTB and Inspector-General in Bankruptcy

[2019] AATA 5194

CXTB and Inspector-General in Bankruptcy [2019] AATA 5194 (27 November 2019)

ADMINISTRATIVE APPEALS TRIBUNAL              )

)         No: 2019/2963
TAXATION AND COMMERCIAL DIVISION            )

Re: CXTB
Applicant

And:  Inspector-General in Bankruptcy

Respondent

TRIBUNAL:  R Cameron, Senior Member

DATE OF CORRIGENDUM: 12 October 2021

PLACE:           Melbourne

The Tribunal amends its decision of 27 November 2019 by:

1.at paragraph 4, first sentence, delete the words following “employed at” and insert “The Employer”.

2.at paragraph 6, first sentence, delete the words following “payments from” and insert “The Employer”.

3.at paragraph 6, second sentence, delete the words following “made by” and insert “The Employer after acceptance of the claim, which contain entries recording the Work Cover weekly payments”.

4.at paragraph 6, fourth sentence, delete the words following “employer as” and insert “The Employer and shows gross payments made by The Employer to the Applicant during that financial year”.

5.at paragraph 6, fifth sentence, delete the words following “made by” and insert “The Employer”.

6.at footnote 8, delete the words following “solely by” and insert “The Employer”.

7.at paragraph 38, second sentence, delete the words following “CAP by” and insert “The Employer”.

8.at paragraph 40, sixth sentence, delete the words following “deducted by” and insert “The Employer from the weekly payments that were made to him”.

[sgd]

Senior Member

Division:TAXATION AND COMMERCIAL DIVISION

File Number:          2019/2963

Re:CXTB

APPLICANT

AndInspector-General in Bankruptcy

RESPONDENT

DECISION

Tribunal:R CAMERON SENIOR MEMBER

Date:27 November 2019

Place:Melbourne

The Tribunal affirms the decision under review.

....[sgd]...................................................................

R CAMERON SENIOR MEMBER

Catchwords

BANKRUPTCY – contribution liability under s 139W – whether worker’s compensation is excluded from income assessment – the meaning of income under s 139L – what defines the character of income – definition of income should be construed according to ordinary concepts and usages – whether cashed out annual leave excluded from income assessment – worker’s compensation and cashed out annual constitute income – decision under review affirmed

Legislation

Bankruptcy Act 1966 (Cth)
Income Tax Assessment Act 1936 (Cth)
Income Tax Assessment Act 1997 (Cth)

Workplace Injury Rehabilitation and Compensation Act 2013 (Vic)

Cases

Re Brackenreg and Federal Commissioner of Taxation (2003) 53 ATR 1116
Commissioner of Taxation v Slaven (1984) FCR 11
Re Coward and Federal Commissioner of Taxation (1999) 41 ATR 1138
Di Cioccio v Official Trustee in Bankruptcy (2015) 229 FCR 1
Federal Commissioner of Taxation v Inkster (1989) 24 FCR 53
Federal Commissioner of Taxation v Smith (1981) 147 CLR 578
Federal Commissioner of Taxation v Stone (2005) 222 CLR 289
Re Gillies; Ex Parte Official Trustee in Bankruptcy (1993) 42 FCR 571
Gittins v Field [2018] FCA 976
Re Love and Official Trustee in Bankruptcy [1996] AATA 11203
Scott v Commissioner of Taxation (1935) 35 SR (NSW) 215

Re Walliker and Federal Commissioner of Taxation (1998) 40 ATR 1108

REASONS FOR DECISION

R CAMERON SENIOR MEMBER

27 November 2019

THE REVIEWABLE DECISION

1. This is an application by CXTB (“the Applicant”) for review of a decision of a Delegate of the Inspector-General in Bankruptcy (“the Respondent”) made on 22 May 2019 assessing his contribution liability under section 139W of the Bankruptcy Act 1966 (“the Act”) for the Contribution Assessment Period 10 May 2018 to 9 May 2019 (“CAP”) as $3,573.36     (“the reviewable decision”).[1]

   [1] The reviewable decision is document T 65 of the T documents.

   MATERIALS AND EVIDENCE BEFORE THE TRIBUNAL

2. The T documents were tendered in evidence. Additionally, both parties filed extensive Statements of Facts, Issues and Contentions which have been considered by the Tribunal.

   RELEVANT FACTS

3. The facts in this case are not controversial.

4. The Applicant was employed at The Employer. He made an injury claim in writing on 9 March 2018 to the Victorian Work Cover Authority (“Work Cover”)[2] (“the claim”).[3] The claim was accepted by Work Cover for what was said to be “a work-related injury”. The claim and its acceptance were governed by the scheme created by the Victorian Workplace Injury Rehabilitation and Compensation Act2013 (“the WIRC Act”). Applicable provisions of the WIRC Act need not be reproduced in these reasons. The WIRC Act provides an entitlement for compensation to a worker if there is caused to them an injury arising out of, or in the course of their employment.[4]

   [2] The Victorian Work Cover Authority will hereinafter be referred to as “Work Cover”.

   [3] The claim was in the form of a "Worker's Injury Claim Form" signed by the Applicant. (It forms part of document T 49 of the T documents at page 177). Part 4 of the claim form included details of amongst other things, his usual pre-tax weekly earnings. It did not include a claim for compensatory, or common law damages.

   [4] Section 39 “Entitlement to compensation” of the WIRC Act.

5. On 13 April 2018 Work Cover wrote to the Applicant advising him of the acceptance of the claim. The letter observed that while he was unable to work his normal job or hours because of his work-related injury, he would be paid 95 per cent of his Pre-Injury Average Weekly Earnings (“PIAWE”) for the first 13 weeks and 80 per cent of his PIAWE after 13 weeks.[5]

   [5] The letter from Work Cover’s claims agent forms part of document T 21 of the T documents.

6. Once the claim was accepted, the Applicant received weekly payments from his employer, The Employer. There are several documents headed “Pay Advice” in evidence before the Tribunal which record fortnightly payments being made by The Employer after acceptance of the claim, which contain entries recording the Work Cover weekly payments.[6] A “PAYG payment summary” for the financial year ended 30 June 2018 is also in evidence before the Tribunal.[7] It shows the payer or employer as The Employer and shows gross payments made by the employer to the Applicant during that financial year.[8] There is no distinction made in the PAYG payment summary between payments made by Work Cover and payments made by The Employer. The several Pay Advice forms and the PAYG payment summary both record income tax being deducted from the payments made by the Applicant’s employer to him.

   [6] Although described as "weekly payments" the Applicant was in fact paid fortnightly. Nothing turns on this distinction.

   [7] The document forms part of document T 16 of the T documents at page 94.

   [8] The Applicant’s tax return for the financial year ended 30 June 2018 was also in evidence before the Tribunal (it also forms part of document T 16 at page 96). The tax return showed the taxable income for that financial year and the payments being made solely by The Employer.

7. On 9 May 2018, the Applicant presented his own petition and became bankrupt. The Official Trustee was appointed trustee of the Applicant’s bankrupt estate.

8. On 22 March 2019, the Official Trustee, as it was obliged to do, under section 139W of the Act, made an assessment of the income that was likely to be derived, or was derived, by the Applicant during the CAP. An assessment of the Applicant’s contribution that he was liable to pay in respect of the CAP under section 139S was then calculated at $3,922.23 (“the March 2019 Income Contribution Decision”). A written notice of the Applicant’s “Income Contribution Liability” with attached calculations based on a PAYG income of $87,635.35, was sent to the Applicant on that day.[9]

   [9] The letter containing the Applicant’s Income Contribution Liability and attached calculations forms part of document T 3 of the T documents.

9. Following a request made by the Applicant for review of the assessment of his Income Contribution Liability, on 22 May 2019 the Respondent reviewed the Official Trustee’s decision of 22 March 2019 (“the review”). Upon conducting the review, the Respondent set aside the March 2019 Income Contribution Decision, and made a fresh assessment   of the Applicant’s liability to make an income contribution for the CAP. The new assessment by the Respondent determined that his Income Contribution Liability would be $3,573.36 on a gross income of $86,423.63.

   ISSUE FOR CONSIDERATION OF THE TRIBUNAL

10. The issue for determination by the Tribunal is whether payments received by the Applicant following the acceptance of his Work Cover claim during the CAP constituted income within the meaning of section 139L (1) of the Act.

    THE CONTENTIONS OF THE PARTIES

11. As noted earlier, both parties have filed comparatively lengthy Statements of Facts, Issues and Contentions. Their essential elements will be briefly summarised for the purposes of these reasons.

    The Applicant

12. The Tribunal has considered the contents of the Applicant’s Statement of Facts, Issues and Contentions. The key points emerging from it will be briefly summarised hereunder.

13. The Applicant contends that the Work Cover payments do not fall within the definition of “income” within the meaning of section 139L of the Act.

14. The Applicant contends that payments he received from Work Cover are strictly payments for injury, and as he puts it, for wrong done to him.

15. The Applicant argues that he suffered a significant wrong at the hands of his employer, and consequently suffered an injury within the meaning of the WIRC Act. He contends that the weekly payments he received following the accepted Work Cover claim, regardless of their character or form, are provided as compensation for injury. He places much emphasis on the notion of “compensation” as used in Division 2 of Part 5 of the WIRC Act. He made reference to the “compensation” scheme created under the provisions of the WIRC Act and the specific purposes of the Act which, amongst other things, include compensation in relation to injuries in the workplace.

16. The Applicant developed a contention, the foundation of which examined the scheme for compensation established in the WIRC Act. The fulcrum of this argument is that if the language used in “Division 2 Weekly payments” is carefully examined it reveals (for instance in section 160 it specifically states) that “compensation” of a worker for incapacity that results from an injury, must be in the form of weekly payments.

17. The Applicant contends that compensation within the meaning of the WIRC Act is different from income in its ordinary meaning. The position being that a bankrupt’s right to compensation for personal injury, or wrong, is protected. He highlights this distinction by contending that if his injuries do not heal over time, he would be eligible for payment of a lump sum from his employer. However, such lump sum (if it were awarded to him) would have the current fortnightly payments that he has been receiving from his employer deducted. As such, this treatment of those fortnightly payments demonstrates that they are, as he calls it, “an intangible asset” as distinct from income within the meaning of section 139L of the Act on its true and proper construction.

18. Compensation for injury is not treated in the same way as, using the Applicant’s descriptor, “ordinary income” from wages, or a return on investment.

19. Therefore, because the weekly payments are categorised as compensation payments for injuries suffered, they are not income within the meaning of section 139L of the Act and are excluded from the Applicant’s income contribution calculation under Division 4B of Part VI of the Act.

20. By reason of that analysis, the Applicant further contends that weekly payments are property in accordance within the meaning of section 116 (2)(g) of the Act. Therefore they are not subject to assessment for the purposes of making any contribution to his bankrupt estate for the purposes of Division 4B of Part VI of the Act.

21. The Applicant also highlighted the fact that the termination of his employment did not affect his entitlement to Work Cover payments. He argues that this fact supports his contention that the payments he was receiving every fortnight were for his incapacity to work, rather than for lost earnings. In that setting, such receipts were not “income” within the ordinary meaning.

    The Respondent

22. The Respondent contends that there is a long line of established authority in support of the principle that a receipt in replacement of, or substitution for, ordinary income is itself ordinary income. Several authorities were referred to in support of this contention in the Respondent’s Statement of Facts, Issues and Contentions.

23. The Respondent’s position is that the Work Cover payments are compensation for the loss of income, not earning capacity.

24. Alternatively, the Respondent says even if the Applicant’s Work Cover payments are treated as compensation for the loss of earning capacity, they are nonetheless, income payments and not capital payments, in accordance with various authorities of the High Court and the Federal Court which have determined this question in the past.[10]

    [10] Federal Commissioner of Taxation v Smith (1981) 147 CLR 578; Federal Commissioner of Taxation v Inkster (1989) 24 FCR 53.

    CONSIDERATION

    Were the weekly payments received by the Applicant “income” within the meaning of section 139L of the Act?

25. Division 4B is included in the Act to require a bankrupt who derives income during the bankruptcy to pay contributions towards the bankrupt’s estate.[11]

    [11] Section 139J "Objects of Division". A helpful consideration of the objects of Division 4B is to be found in the decision of the Full Federal Court of Australia in Di Cioccio v Official Trustee in Bankruptcy (2015) 229 FCR 1 at [18] and [34].

26. Consequently, under section 139W (1) as soon as practicable after the start of each contribution assessment period in relation to a bankrupt, the trustee is required to make an assessment of the income derived by the bankrupt during that period, and of the contribution (if any) that the bankrupt is liable to pay in respect of that period.[12]

    [12] Section 139W (1) "Assessment of Bankrupt’s Income and Contribution".

27. The contribution that a bankrupt is liable to pay in respect of a contribution assessment is calculated in accordance with a formula prescribed in section 139S of the Act. Once an assessment has been made, the trustee must give the bankrupt written notice setting out particulars of same.

28. The critical factor for the purposes of this application when construing and applying section 139W (1) is the definition of “income”. Section 139L “Meaning of Income” provides a definition which “in relation to a bankrupt, has its ordinary meaning”, subject to several inclusionary and exclusionary qualifications which are not relevant to this application.

29. In the course of submissions during the hearing of this application and in their respective Statements of Issues, Facts and Contentions, the parties referred to several cases where courts of various jurisdictions had construed the term “income” in the context of its ordinary meaning.

30. In those cases, various features of a receipt being classified or categorised as income were identified. One feature was an actual, or expected characteristic connoting regular periodicity in payment.[13] In Federal Commissioner of Taxation v Stone[14] the High Court endorsed the observations of Sir Frederick Jordan made many years ago,[15] that the word income is not a term of art, and that what forms of receipts are comprehended within it must be determined in accordance with the ordinary concepts and usages of mankind.

    [13] The decision of French J in Re: Gillies; Ex Parte Official Trustee in Bankruptcy (1993) 42 FCR 571 at 574. Cited with approval by Charlesworth J in Gittins v Field [2018] FCA 976 at [14].

    [14] (2005) 222 CLR 289 at [8].

    [15] In Scott v Commissioner of Taxation (1935) 35 SR (NSW) 215 at 219.

31. In Federal Commissioner of Taxation v Smith[16] the High Court, in an interesting analogy between the ability to earn being a tree, and the income earned being the fruit thereof, considered that monies paid under a policy in substitution for income take the place of a revenue receipt and therefore, could be classified or identified as income.

    [16] (1981) 147 CLR 578 at 583.

32. The categorisation of weekly payments of compensation made under the Western Australian workers’ compensation legislation was considered by the Full Federal Court in Federal Commissioner of Taxation v Inkster.[17] In that case, the taxpayer received, amongst other things, weekly payments of workers’ compensation from a former employer’s insurer, which were assessed by the Commissioner as income under the relevant provisions of the then applicable Income Tax Assessment Act 1936 (Cth). Pincus J found there was as he called it, a basic rule that payments received to compensate for lost income are themselves income. Similarly, he considered that a payment made to compensate for lost capacity or ability may be income, at least if there is some correspondence between the amount of the payment, and the income lost or likely to have been lost.

    [17] (1989) 24 FCR 53.

33. Lee J made several observations which are useful in determining whether a payment or receipt have the characteristics of income for the purposes of any given application. When determining whether a payment received has the character of income, the provisions of the workers’ compensation legislation will be of importance. However, although that legislation may indicate or prescribe a purpose for such payments, those provisions alone will not determine the character of the payments without regard to the circumstances in which they were received. Periodicity of payment alone may not be determinative of the question of whether the payments are in the nature of income, but such circumstances are important, and additional circumstances may make it clear that the periodical payments do have such character. Ultimately, his Honour categorised the compensation payments received by the taxpayer as income according to ordinary concepts by virtue of their regularity and periodicity.

34. The Applicant placed considerable emphasis on a decision of the Full Court of the Federal Court of Australia of Commissioner of Taxation v Slaven[18] as justification for concluding that the weekly payments he received were not income for the purposes of section 139L of the Act. The approach adopted by the Full Court to determine whether a payment is treated as income (in the setting of the Income Tax Assessment Act 1936) was essentially the same as the authorities referred to previously in these reasons. The Court identified several considerations as follows:

    (a)The starting point for the determination of the character of payments which the recipient is entitled to receive must be the terms of the enabling Act itself;

    (b)Regular periodicity of payment has been said to assist in the characterisation of payments as income. However, the regularity and periodicity of a payment will generally not be a decisive consideration;

    (c)Whether a receipt constitutes income or capital, must of course depend upon a consideration of all the circumstances. It is the character of the receipt in the hands of the recipient that must be determined; and

    (d)The purpose of a statutory payment, as disclosed by the terms of the statute itself, is a powerful, though not conclusive, aid to the determination of the character of the payment and in particular whether it’s receipt constitutes income in the hands of the recipient.

    [18] (1984) FCR 11.

35. When the Applicant’s claim under the WIRC Act was accepted by Work Cover, his entitlement was calculated in accordance with the formula prescribed in “Division 2 Weekly payments” of that Act (section 161). It was a claim for weekly compensation payments for lost earnings. There is no evidence before the Tribunal to suggest that it was a claim by the Applicant for compensation for pain and suffering, non-economic loss or any other common law rights. As it was the Applicant’s “first entitlement period”[19] (section 161 of the WIRC Act) the benefit he was entitled to be paid was calculated at the rate of 95 per cent of his PIAWE. As was put by Mathews J in Coward v Commissioner of Taxation,[20] the payments had their genesis in an assessment of a loss of earning capacity. This fact alone in accordance with the ordinary concepts and usages of the term is indicative of such payments being characterised as income.

    [19] WIRC Act section 161 (a).

    [20] [1999] AATA 132 at [65].

1. On their face, notwithstanding that such payments might be considered “compensation” within the meaning of Division 2 of the WIRC Act; they were payments nonetheless, for lost income arising from an incapacity for work resulting from an injury. Division 2 does not provide for compensation for pain and suffering or other non-economic loss arising from such injury. As was noted by the Respondent its submissions, compensation for non-economic loss is provided for in Division 5 of Part 5 of the WIRC Act. Common law rights are addressed in Part 7 of the WIRC Act. There is a definite correspondence between the amount of the weekly payments received by the Applicant, and the wages that otherwise would have been lost by him but for the protection offered by the Work Cover scheme enshrined in Division 2 of Part 5 of the WIRC Act.

2. That there was a regular periodicity of payment during the CAP is apparent because such weekly payments are fortnightly. The same pay cycle was used by the Applicant’s employer to pay him the Work Cover benefits as was used to pay his fortnightly earnings prior to acceptance of the claim. This is a further indication of the payments being in the nature of income according to ordinary concepts.

3. There is other evidence before the Tribunal which also demonstrate the indicia of income, adopting ordinary concepts and usages. As noted earlier, the weekly payments calculated in accordance with the formula contained in Division 2 of the WIRC Act, were made during the CAP by the Applicant’s employer The Employer. Work Cover reimbursed the Applicant’s employer for those payments. This is different to the contention of the Applicant who contended that he was being paid by his employer’s insurer to whom his employer paid workers compensation insurance premiums to. When each of the weekly payments were made in accordance with the accepted claim, a Pay Advice was raised recording the weekly payments in the same way as his earnings were treated prior to the Applicant making his claim.

4. As to the Applicant’s contention that termination of his employment not affecting his Work Cover payments corroborate the assertion that the fortnightly payments were for incapacity to work rather than lost earnings, the Tribunal cannot agree. The fortnightly payments continue pursuant to the prescribed formula contained in Division 2 of the WIRC Act, and are a replacement of his weekly earnings (being lost income) as a result of his incapacity for work due to injury. That loss of income or weekly earnings is not limited to one employer, as was the case in Inkster,[21] where the recipient of the workers’ compensation payments made a successful claim on his former employer the Government Railways for whom he had not worked for over 30 years.

   [21] (1989) 24 FCR 53.

5. There are other facts that are relevant in characterising the receipt of fortnightly payments as income in the hands of the Applicant, in accordance with the ordinary concepts and usages of mankind. When the Pay Advice was created for each pay period, income tax was deducted from the payments and a net pay figure calculated. An example of this can be found in the Pay Advice for the pay period from 10 June 2018 to 23 June 2018 which is within the applicable CAP.[22] Also, it should be noted that the PAYG payment summary for the financial year ended 30 June 2018 also recorded the deduction of income tax for all payments received by the Applicant, including the fortnightly payments, as a result of the Work Cover claim.[23] Finally on this matter, the Applicant’s income tax return for the 2017-2018 financial year included in the aggregate gross payments received of $84,515.00 the fortnightly payments (weekly payments within the meaning of the WIRC Act) as income. Tellingly, the Applicant did not seek a refund of tax instalments deducted by his employer The Employer from the weekly payments that were made to him. One would have expected if he contended, as he does now, that the weekly payments were not income but capital, that he would have sought a refund of any taxation deducted by his employer from those payments. It should be recalled in this context that several of the authorities referred to earlier in these reasons, and in the respective parties’ Statements of Facts, Issues and Contentions, involved challenges by the taxpayer to an assessment of workers’ compensation payments in various jurisdictions as income by the Tax Commissioner. The Applicant did not address his change of position between that adopted in his taxation return and at the hearing of this Application. A Notice of Assessment of the income, including the weekly payments received by the Applicant, was subsequently issued by the Australian Taxation Office.

   [22] This Pay Advice forms part of T8 in the T documents at page 68.

   [23] T16 T documents page 94.

6. Additionally the Tribunal notes, as was contended by the Respondent, that several previous decisions of this Tribunal have determined that weekly payments received by an injured worker under various workers’ compensation schemes throughout the Commonwealth of Australia were properly classified as income, usually in the income tax setting. There seems to the Tribunal no reason to depart from this approach in this application.[24]

   [24] Those cases are Re Walliker and Federal Commissioner of Taxation (1998) 40 ATR 1108, Re Coward and Federal Commissioner of Taxation (1999) 41 ATR 1138 and Re Brackenreg and Federal Commissioner of Taxation (2003) 53 ATR 1116.

7. Another matter that should also be considered when determining whether the weekly payments that the Applicant received as a result of the acceptance of the claim under the WIRC Act arises from the drafting of section 139L itself. The Tribunal refers to the observations of Charlesworth J in Gittins v Field[25] that receipts identified in section 139L (1)(b) are specifically excluded from the definition of income whether or not such payments described within them would fall within the ordinary meaning of the word. [26]The enactment of a provision expressly excluding weekly payments under workers’ compensation schemes throughout the Commonwealth of Australia from the definition of income in section 139L (b) of the Act, would be an obvious drafting device by which Parliament could express an intention to ensure that such payments were not included in an assessment of the bankrupt’s income for the purposes of calculating a contribution by the bankrupt under Division 4B of Part VI of the Act. The absence of an express exclusion in section 139L (b) of the Act tells against the contention that weekly payments made to the Applicant under the WIRC Act are not income in accordance with the ordinary concepts and usages of the term.

   [25] [2018] FCA 976 at [48].

   [26] (1989) 24 FCR 53.

8. By reason of the foregoing matters the Tribunal finds that the weekly payments received by the Applicant were “income” within the meaning of section 139L of the Act.

   Cashed out annual leave payments

9. Another matter that was raised by the Applicant in the course of the running of this Application concerned a number of entries identified in the Applicant’s Pay Advices as “cashed out annual leave payments in lieu of annual leave”. Put another way, this is unused annual leave entitlements expressed in dollar terms. The Applicant contended that these items fell into a separate category or classification when compared with weekly payments. The Applicant developed an argument that unused or cashed in leave however it had accrued, or however it was categorised, was treated as a form of “Statutory Income” within the meaning of Divisions 6 and 10 of the Income Tax Assessment Act 1997 (“ITAA Act”). Those Divisions of the ITAA Act do identify concepts of “not assessable income” and “exempt income”. A consideration of these divisions and the sections relied on by the Applicant do not enable the Tribunal to conclude that weekly payments under the WIRC Act are anything other than income. In any event it does not seem possible, on a true and proper construction of section 139L, for these provisions of the ITAA Act to apply or otherwise prevail over the definition of income contained in that section of the Act.

10. The Respondent contended that assuming such amounts were not paid on termination of employment, they are ordinary income. Reference was made to a decision of this Tribunal in the matter of Re Love and Official Trustee in Bankruptcy.[27] The Tribunal held that as unused annual leave was a payment clearly paid to the bankrupt as a product of his employment, and a payment in lieu of salary which would have been paid to him while on leave; it retained the essential characteristics of income derived from employment. The Tribunal further opined that the fact that the payment was in a lump-sum, or that it was paid as a lump sum because of the termination of his employment, did not change that essential characteristic that the payment nonetheless constituted income within the meaning of section 139L of the Act. The Tribunal accepts this contention of the Respondent. As the Tribunal noted earlier in these reasons, there was nothing the Applicant directed the Tribunal to in his submissions concerning this matter that enables it to conclude that the leave entitlement, or leave payment as the case may be, is not characterised as income in accordance with the ordinary concepts and usages of the term.

    Does section 116 (2)(g) of the Act have any application to the weekly payments received by the Applicant?

    [27] [1996] AATA 11203.

11. The Tribunal cannot agree with the contention of the Applicant concerning section 116 (2)(g) of the Act. In short, he contends that the purpose of this section is to protect the rights to compensation of a bankrupt in his position, from his creditors.

12. Unfortunately, this contention misunderstands the distinction between two different parts of the Act. As was helpfully explained by the Full Court of the Federal Court of Australia in the case of Di Ciccio v Official Trustee in Bankruptcy.[28] Division 3 of Part VI of the Act addresses what is, or what is not, the property of the bankrupt divisible among the bankrupt’s creditors. This is a different concept to that of “Division 4B Contribution by bankrupt and recovery of property”. As noted earlier, this division has as its object to require a bankrupt who derives income during the bankruptcy to pay contributions to his estate. Section 116 is concerned with property, not the character of property as income or capital.

    [28] (2015) 299 FCR 1.

13. The Official Trustee as Trustee of the Applicant’s bankrupt estate has no entitlement to the weekly payments received by the Applicant from Work Cover. Those payments are not property that is vested in the Official Trustee either as after-acquired property, or otherwise. What Division 4B requires is that the payments as income within the meaning of section 139L must be included in an assessment of the Applicant bankrupt’s income when applying the statutory formula prescribed by that Division. When that assessment has been conducted, an unsecured debt is created against the bankrupt, in this case the Applicant. The debt is owed to the bankrupt estate of the Applicant. It is not property of the Bankrupt estate. The weekly payments are taken into account as income for the purposes of the assessment under section 139W they are not property within the meaning of section 116 (2).

    DECISION

14. By reason of the foregoing matters the reviewable decision is affirmed.

I certify that the preceding 49 (forty-nine) paragraphs are a true copy of the reasons for the decision herein of R Cameron, Senior Member

...[sgd]................................................................
Associate
Dated: 27 November 2019

Dates of hearing:	22 October 2019
Applicant:	In person
Advocate for the Respondent:	Stephen Linden