Periodic Compensation Payments Common Sense for Federal Budget
The Federal Government would be using common sense if the Budget included an amendment to the Income Tax Act which would confirm that structured settlement payments (or periodic payments) are not subject to income tax.
AMA Federal Vice President, Dr Sandra Hacker, said structured settlements were a win/win option for injured persons and the Federal Government.
"Large sums of compensation are awarded in court settlements and these are meant to last for the plaintiff's life time. Increasingly though, compensation awards are exhausted long before that and injured persons are forced to rely on welfare and government support," Dr Hacker said.
"This method of compensation will also assist in halting the increase in the cost of medical professional indemnity insurance.
"This country is in a medical indemnity crisis. We are living in an increasingly litigious society. The increasing cost of insurance is forcing some doctors, particularly those in rural areas, to abandon certain services including anaesthetics and obstetrics.
"Also, such restriction of choice in private medical practice will impact negatively on the uptake of private health insurance.
"The Federal Government could conservatively save $6.5-$13m a year in welfare and community services which are provided to people with disabilities after their lump sum awards have been exhausted.
"An amendment to the Income Tax Assessment Act would enable accident victims to maximise their funds and it would give Australians a fairer and more effective compensation system.
"The United Kingdom, the United States and Canada have seen the logic and need for such structure settlements - the Federal Government must see the logic as well," Dr Hacker said.