I underwent major Aortic Heart Valve surgery during 2022 and was off work for a total 3 months on paid sick leave after having open heart surgery in Australia. During the time I submitted a group Salary Continuance claim for a trauma recovery benefit and was successful with the claim (under the terms of the policy). The insurance company withheld the relevant tax amount and included that as part of my annual tax return. Subsequently after lodging my claim the tax certificate was classed as income protection and additional tax was requested from me by the ATO, which I paid at the time - my question is that should this have been classed as a trauma recovery claim (critical illness benefit) and not as income protection, if so what do I need to do to lodge an objection? Thank you
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my question is that should this have been classed as a trauma recovery claim (critical illness benefit) and not as income protection,
Trauma benefits are generally not taxable if paid as a lump sum, but you have claimed for salary continuance.
I submitted a group Salary Continuance claim for a trauma recovery benefit
A benefit that replaces salary is taxable.
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my question is that should this have been classed as a trauma recovery claim (critical illness benefit) and not as income protection,
Trauma benefits are generally not taxable if paid as a lump sum, but you have claimed for salary continuance.
I submitted a group Salary Continuance claim for a trauma recovery benefit
A benefit that replaces salary is taxable.
Thank you for the response, much appreciated.
Just trying to understand if there were any similar rulings around "if the payment was not to replace salary but rather a trauma claim benefit (under a salary continuance policy)", which was paid out due to the nature of the critical illness (with no super being paid out on the claim). As a note during the time off I claimed my accrued sick leave to replace my salary.
Any feedback is welcomed - thank you
You should read the terms of your policy - that will define the nature of the benefits paid.
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