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This Ruling sets out the Commissioner's opinion on the way in which the relevant provisions identified below apply to the defined class of entities who take part in the scheme to which this Ruling relates.

The relevant provisions dealt with in this Ruling are: • section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997); and • Part 3-1 of the ITAA 1997. All subsequent references in this Ruling are to the ITAA 1997.

The class of entities to which this Ruling applies comprises individuals who receive a payment from the Western Australian Government under the Stolen Wages Reparation Scheme WA being administered from 7 March 2012 to 6 September 2012.

The Commissioner makes this Ruling on the precise scheme identified in this Ruling.

The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 9 to 18 of this Ruling.

If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: • this Ruling has no binding effect on the Commissioner because the scheme entered into is not the scheme on which the Commissioner has ruled; and • this Ruling may be withdrawn or modified.

This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: Commonwealth Copyright Administration Copyright Law Branch Attorney-General's Department National Circuit Barton ACT 2600 or posted at: http://www.ag.gov.au/cca

This Ruling applies from 1 July 2011 to 30 June 2013. The Ruling continues to apply after 30 June 2013 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).

The Western Australian Government has announced a proposal to offer monetary compensation to individual Aboriginal and Torres Strait Islanders whose income was controlled or withheld by the Western Australian Government due to the provisions of The Aborigines Act 1905 (WA ) and the Native Administration Act 1905-1947 (WA ).

Ex gratia payments will only be made under this scheme if the individual is a living person who: (a) is an Aboriginal or Torres Strait islander person born before 1958; (b) from the age of 14 years or older was resident at a Government Native Welfare Settlement in Western Australia; (c) while resident at one or more Western Australian Government Native Welfare Settlements in Western Australia experienced direct government control over the individual's income and all or part of the income was withheld from the individual; and (d) was never repaid the outstanding monies owed by the Western Australian Government.

If an individual considers they meet the eligibility criteria they can lodge an application. The Department of Indigenous Affairs will then assess the application to ensure that the applicant meets the eligibility criteria. Once the application is approved, the individual will receive a one off, lump sum ex gratia payment of $2,000.

The payment is an ex gratia payment made as an expression or regret by the Western Australian Government, it is not deemed to be a full reparation.

The payment is being made to compensate individuals for the impact of past wage control under The Aborigines Act 1905 (WA ) and Native Administration Act 1905-1947 (WA ). It is not intended to be a replacement of income.

Lodgement of an application or receipt of the ex gratia payment, will not in any way affect the legal rights which the applicant may otherwise have.

Applications can be lodged from 7 March 2012 to 6 September 2012 inclusive.

An individual can lodge one application for a payment only.

If an applicant dies after his or her application has been lodged, but before a payment has been approved, then subject to the application being complete and subsequently approved, an ex gratia payment will be made to the nominated bank account set out in the application and in accordance with the Administration Act 1903 (WA ) and the Aboriginal Affairs Planning Authority Act 1972 (WA ).

The quantum of the ex gratia payment cannot be the subject of a complaint by the applicant. An applicant can however make a complaint on the following grounds: (a) an error of process occurred; and/or (b) an error of fact was made.

Lump sum payments made to eligible persons by the Western Australian Government under the Stolen Wages Reparation Scheme WA is not ordinary income under section 6-5.

There are no CGT consequences under Part 3-1 when an eligible person receives a lump sum payment under the Stolen Wages Reparation Scheme WA.

A payment or other benefit received by a taxpayer is included in assessable income if it is: • income in the ordinary sense of the word ( ordinary income ); or • an amount or benefit that through the operation of the provisions of the tax law is included in assessable income ( statutory income ).

Subsection 6-5(1) provides that the assessable income of a taxpayer includes income according to ordinary concepts (ordinary income).

The legislation does not provide specific guidance on the meaning of income according to ordinary concepts. However, a substantial body of case law exists which identifies likely characteristics.

In GP International Pipecoaters Pty Ltd v. Federal Commissioner of Taxation , [1] the Full High Court stated: To determine whether a receipt is of an income or of a capital nature, various factors may be relevant. Sometimes the character of receipts will be revealed most clearly by their periodicity, regularity or recurrence; sometimes, by the character of a right or thing disposed of in exchange for the receipt; sometimes, by the scope of the transaction, venture or business in or by reason of which money is received and by the recipient's purpose in engaging in the transaction, venture or business.

Amounts that are periodical, regular or recurrent, relied upon by the recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income, as are amounts that are the product in a real sense of any employment of, or services rendered by, the recipient. [2] Amounts paid in substitution for salary or wages foregone or lost may also be ordinary income. [3]

Ultimately, whether or not a particular receipt is ordinary income depends on its character in the hands of the recipient. [4] The whole of the circumstances must be considered [5] and the motive of the payer may be relevant to this consideration. [6]

Payments made under the scheme are one-off lump sum payments in the nature of compensation. Furthermore, payments are not being made as a substitute for any loss of earnings of the eligible individual, but are payments made by the Western Australian government to express regret for past treatment. They do not possess the characteristics of ordinary income. Therefore the payments will not be assessable as ordinary income.

An amount that is not ordinary income may still be assessable income as a result of the operation of section 6-10 which includes statutory income in assessable income.

Payments made under the scheme are not assessable as statutory income under any of the provisions in Division 15 or Division 20.

There are no CGT consequences when an eligible person receives a payment under the Stolen Wages Reparation Scheme WA.

The following is a detailed contents list for this Ruling: Paragraph What this Ruling is about 1 Relevant provision(s) 2 Class of entities 3 Qualifications 4 Date of effect 8 Scheme 9 Ruling 19 Appendix 1 - Explanation 21 Ordinary income 22 Statutory income 28 Capital gains tax 30 Appendix 2 - Detailed contents list 31