The Minister for Revenue and Assistant Treasurer, Peter Dutton, today announced a review of the income tax exemption provided by Division 54 of the Income Tax Assessment Act 1997 for payments made under structured settlements to seriously injured people.
‘The purpose of the review, which is a statutory requirement, is to assess the effectiveness of the tax exemption and to identify any changes that need to be made,’ Mr Dutton said.
Division 54 was introduced in 2002 to encourage the use of structured settlements to compensate accident victims. A structured settlement involves regular payments over the lifetime of the injured person rather than a one‑off lump sum. Structured settlements offer injured people more security about their future income and their capacity to meet ongoing medical expenses.
The review will examine the operation of Division 54 and also Division 2A of Part 10 of the Life Insurance Act 1995, which contains related provisions. It is concerned with the tax treatment of payments made under structured settlements and the associated limitations on the ability of a person to assign or commute such payments.
Mr Alan Cameron AM will undertake the review.
Mr Cameron has extensive experience in both the public and private sectors. He was chairman of the Australian Securities Commission and its successor, the Australian Securities and Investments Commission, from 1993 to 2000.
‘Alan Cameron has been involved in regulatory projects and governance reviews of various kinds since 2000. He holds a number of directorships and consultancies, which broaden the experience he brings to the review,’ Mr Dutton said.
Mr Cameron is chairman of two life insurance companies. Neither company sells annuities to accident victims.
The review will be supported by a small secretariat in Treasury.
Mr Cameron is inviting submissions from the public about matters relating to the operation of Division 54 Income Tax Assessment Act 1997 and also Division 2A, Part 10 Life Insurance Act 1995.
Submissions are due by 12 October 2007 and may be sent by email to division54@treasury.gov.au or posted to:
Review of Division 54 Secretariat
The Treasury
Langton Crescent
PARKES ACT 2600