Check whether Victorian compensation is disregarded for capital gains
MaintainedLast reviewed
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- In a firm-controlled tool, set the compensation or damages the lawyer identifies against section 118-37 and record whether the opened words disregard a capital gain or capital loss. The tool does not say the sum is exempt from income tax, and it does not write a schedule that will be filed or served.
- What the lawyer must review
- Decide whether section 118-37 disregards a capital gain or loss on these facts.
- Do not treat the section as an income-tax exemption for weekly payments or a common-law lump sum.
- Check the trustee and relative limbs yourself before they are used.
Rules that apply
The document starts from the task name. Change it if this piece of work is different.
The work product
Forum. Victoria: capital gains treatment of compensation or damages
Produce. A note of whether the opened words of section 118-37 disregard a capital gain or capital loss on the sum the lawyer identifies.
Have ready. The compensation or damages the lawyer identifies; Whether the recipient is the injured person or a trustee.
Example of the limit. Illustrative example: A lump sum is paid for a personal injury. The note sets the sum against section 118-37(1)(a) and does not say the lump sum is free of income tax. The lawyer decides whether the disregard applies.
Stop and hand it back when
- The tool would say the lump sum is exempt from income tax.
- The facts do not say who received the sum.
Sources for this task were checked on 2026-10-23.
Who does what
| Role | What they do |
|---|---|
| Assistance | In a firm-controlled tool, set the compensation or damages the lawyer identifies against section 118-37 and record whether the opened words disregard a capital gain or capital loss. The tool does not say the sum is exempt from income tax, and it does not write a schedule that will be filed or served. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Apply section 118-37 only to a capital gain or capital loss from a CGT event relating directly to the compensation or damages described.
- Do not treat the section as making weekly compensation or a damages lump sum free of income tax.
- The personal limb and the trustee limb are different. The lawyer chooses which, if either, applies.
- Nothing opened in the Wrongs Act turns this section into a Victorian damages rule.
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) section 118-37 · 2026-10-23
- Wrongs Act 1958 (Vic) table of provisions · 2026-10-23
Income Tax Assessment Act 1997 section 118-37(1) disregards a capital gain or capital loss from a CGT event relating directly to compensation or damages for any wrong or injury suffered in the person's occupation, or any wrong, injury or illness the person or a relative suffers personally. A trustee limb covers compensation or damages a trustee receives for a beneficiary's occupational wrong or injury, or a personal wrong, injury or illness of the beneficiary or the beneficiary's relative, other than a trustee of a complying superannuation entity. A further limb covers a CGT asset a beneficiary receives from the trustee to the extent it is attributable to that compensation. The other paragraphs of the section, including gambling and particular grants, were opened and are not used unless the lawyer says the facts match them.
Nothing opened in the Wrongs Act turns section 118-37 into an income-tax exemption for weekly payments or for a common-law lump sum. The tool records the capital-gains question only.