Check the capital gains treatment of compensation or damages
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- The firm-controlled tool flags a compensation receipt against the capital-gains disregard in the section the lawyer names, and it leaves ordinary-income questions blank. It does not write tax advice to the client.
- What the lawyer must review
- You decide whether s 118-37 disregards a capital gain on this receipt.
- You decide whether any periodic payment was ordinary income.
- Use a firm-controlled tool. Wage, tax and care records are confidential under ASCR r 9 and APP 11.
- Decide whether a breach would be notifiable under the Privacy Act 1988 (Cth).
Open a jurisdiction version of this task to see which instruments apply: VICNSWQLD
Who does what
| Role | What they do |
|---|---|
| Assistance | The firm-controlled tool flags a compensation receipt against the capital-gains disregard in the section the lawyer names, and it leaves ordinary-income questions blank. It does not write tax advice to the client. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Limit the flag to a capital gain or capital loss from a CGT event relating directly to compensation or damages of the kind s 118-37(1)(a) describes.
- Do not say a weekly payment, a statutory benefit, or a damages lump sum is free of income tax.
- Do not write advice for the client to send or rely on.
- Leave the ordinary-income question blank.
Forms and precedents for this task
| Form or precedent | Kind | AI use | Summary |
|---|---|---|---|
| Client checklist after a personal injury settlement | Checklist | AI use Yellow | What a client does after a personal injury settlement is signed: Medicare, Centrelink, the NDIS, tax, and money held for a child. |
Signed-in accounts can read the full text of each one. All precedents.
Sources
- Income Tax Assessment Act 1997 (Cth) s 118-37 · 2026-10-23
These are suggested working checks. Confirm the required checking with the responsible lawyer before work starts; the checking approach does not establish permission to use AI.
If a figure is copied into a document filed in court, the lawyer checks that court's generative-AI practice note. The opened notes are the New South Wales Supreme Court page for Practice Note SC Gen 23, the Victorian Supreme Court news page for Practice Note SC Gen 25, and the Law Society of NSW court-protocols page. The practice-direction PDFs were not opened.