Hi,

Please see question details below. I have read the links and I'm still struggling with how to answer these 3 payments. I'm of the opinion that they are all income, no matter how they were received, i.e. lump payment or weekly payments. What I'm confused about is their nature - statutory or ordinary.

Case Study 2 - Interpretation of Facts

http://law.ato.gov.au/atolaw/view.htm?docid=DTR/TR2002D13/NAT/ATO/00001

COWARD v FC of T

http://www.iknow.cch.com.au/#!/document/atagUio538221sl16696657/coward-v-fc-of-t-administrative-appeals-tribunal-of-australia-south-australia-09-march-1999

CCH Master Tax Guide 2016

Paragraph 10-180

s 6-5 ITAA1997

http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s6.5.html

s15-30 ITAA 1997

http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s15.30.html

:

On 12 February 2002, Mr Murphy who was employed by the Department of Housing injured his shoulder and back as a result of a workplace incident.

He made a workers' compensation claim in relation to his injury.

In March 2004, he formally retired from his employment by reason of his incapacity.

He started receiving weekly compensation payments under the Compensation Act 1971.

In January 2015, he turned 65.

In accordance with the Safety, Rehabilitation and Compensation Act 1988 the rate of compensation payable to him was reduced and he was informed that he was entitled to request redemption.

In December 2015 he exercised his right to request lump sum redemption.

His redemption payment was calculated and an income tax was deducted from this amount and the balance was paid to him.

Mr Murphy objected to the assessment of income tax.

Required:

Review the facts above and then use the concepts explored in the above references and briefly discuss whether below payments were capital in nature, ordinary income or statutory income.

1. Weekly payments that Mr Murphy was entitled to receive until he turned 65

2. Weekly payments that Mr Murphy was entitled to receive after he turned 65

3. Lump sum redemption amount he received after he turned 65

Your answer should have a brief explanation of your reasoning.