Keys and Commissioner of Taxation (Taxation)

The applicant sought review of the Commissioner of Taxation's decision to disallow objections to income tax assessments for the years ended 30 June 2012, 2013, and 2014. The dispute concerned whether payments made to the applicant under Western Australian workers' compensation law constituted assessable income or were loans. The applicant suffered a work-related injury in July 2011 and subsequently received weekly payments from his employer under the Workers' Compensation and Injury Management Act 1981 (WA). These payments, from which PAYG tax instalments were withheld, continued with some variations in amount and frequency, and included an amount for arrears.

The primary legal issues before the court were whether the payments received by the applicant under the workers' compensation legislation were assessable income for the relevant tax years, and whether any subsequent recovery of damages paid to reimburse these workers' compensation payments represented the repayment of a loan or compensation for a wrong or injury suffered in his occupation. The court was required to consider the application of section 59-30(3) of the Income Tax Assessment Act 1997 (Cth), which deals with the assessability of lump sum damages awarded for a wrong or injury.

The court reasoned that the payments made to the applicant were weekly payments of compensation during incapacity, as provided for under the Workers' Compensation and Injury Management Act 1981 (WA). These payments were not loans, and the subsequent recovery of damages was not a repayment of a loan but rather compensation for the injury sustained. The court accepted the respondent's submission that the lump sum damages awarded represented compensation for a wrong or injury suffered by the applicant in his occupation, aligning with the provisions of section 59-30(3) of the Income Tax Assessment Act 1997 (Cth).

The decision under review was affirmed.