Common Sense Being Used for Seriously Injured People
The Federal Labor Party's promise to support tax reform in relation to compensation payments for seriously injured people was welcomed today by the Australian Medical Association.
AMA Federal Councillor, Dr Michael Sedgley, said the Labor Party was using common sense that was very much needed at the Federal level of politics, for this issue of lump sum compensation.
"The AMA has been lobbying for this taxation change which should ensure that periodic compensation payments (or structured settlements) are tax free just as lump sum compensation payments are tax free," Dr Sedgley said.
"An amendment to the Income Tax Act for structure settlements, will mean seriously injured people could then rely on regular payments that are tax free rather than a lump sum which they could exhaust long before their expected lifetime.
"It's absurd that currently a compensation payment can only be tax-free when provided as a lump sum.
"Seriously injured people should be entitled to the same amount of money but paid in the form of a regular income to ensure the funds are not exhausted prematurely.
"The Labor Party has committed itself to a sensible social and economic policy.
"The Opposition understands that an amendment to the Income Tax Act could conservatively save taxpayers $6.5 - $13m a year in welfare and community services which is provided to people with disabilities after their lump sum awards have expired.
"Structured settlements could also help to slow down the increasing cost of medical professional indemnity insurance. These costs are forcing some doctors, particularly those in rural areas, to abandon certain services including anaesthetics and obstetrics," Dr Sedgley said.