Workers Compensation & Income Tax.
This information provided below is complied from other sources and should not be taken as professional advice. Always check with the Australian Taxation office, your accountant or a tax expert prior to relying on this advice.
Shortly your insurer and/or employer will be sending you your income certificates. This is a brief collation of information that may assist you in the broadest terms. Do not replace this with talking directly with the ATO, your accountant or an tax advisor.
Are payments made to you through the NSW or Comcare workers compensation system taxable?
Yes. Payments made to you through a Workers Compensation Scheme are treated as income. That means they are taxable as they would be if you were working. The ATO (Australian Tax Office) says the following:
Compensation and insurance payments for lost salary or wages
You must declare any amounts you received for lost salary or wages under an income protection, sickness or accident insurance policy or workers compensation scheme.
If you've made a personal injury claim and you agree to a settlement, or a court orders in your favour, you may receive compensation in the form of a lump sum payment or structural (periodic) payments (or both). Such payments are tax-free, provided certain conditions are met.
You don't include payments made to you under an income protection, sickness or accident insurance policy (where the premiums are deductible and the payments replaced income) at this question, if:
- tax has already been withheld
- you've already included them on your tax return.
Lump sum payments
Lump-sum payments are not (generally) taxable. if they were a taxable amount should have been set aside in the proceedings but please check with the ATO or your tax agent for clarification in your own individual case.
Should you include everything?
Payments made to you for reimbursements (such as medical or travel expenses) are not taxable.
How do you record it?
If you are lodging your tax return yourself the ATO advices that the figure should be included as Other income in the:
Tax return for individuals (supplementary section) at question 24 other income.
ATO Tax Help Program
Tax Help is a network of ATO-trained and accredited community volunteers who provide a free and confidential service to help people complete their tax returns online using myTax.
Am I eligible for Tax Help?
You are eligible for Tax Help in 2016–17 if your income is around $60,000 or less for the income year and you did not:
- work as a contractor, for example a contract cleaner or taxi driver
- run a business, including as a sole trader
- have partnership or trust matters
- sell shares or an investment property
- own a rental property
- have capital gains tax (CGT)
- receive royalties
- receive distributions from a trust, other than a managed fund
- receive foreign income, other than a foreign pension or annuity.
Book an appointment
If you’re eligible for Tax Help, you will need a myGov account linked to the ATO. If necessary, our volunteers can help you create your myGov account and link to the ATO.
When you are ready to make an appointment, phone us on 13 28 61 for your nearest Tax Help centre.
Remember to bring these to your appointment:
- your myGov user ID and password
- your bank account details (BSB and account number)
- your tax file number
- an original or amended notice of assessment from any one of the last five years
- income statements from all sources
- all your receipts for gifts, donations and work-related expenses
- details of any child support payments made
- details of any losses on investments in shares and rental properties (net investment losses)
- If you had a spouse (married or de-facto) at any time during the financial year, you also need to bring details of their taxable income or a reasonable estimate.
Every year the IWSN helpline receives calls from injured workers about taxation and the issues they face with incorrect certificates or questions on how to lodge them. Please know that the Injured Workers Support Network knows next to nothing about taxation law and can not provide you with the advice you will be wanting beyond what we have collated above.