Tax Implications with Banking Royal Commission Compensation Payments
The Banking Royal Commission was finalised in February 2019 with the release of the Commissioner’s Report. It is only now, 18 months on from the release of the report that we are starting to see refunds, some of significant value, being paid to clients as compensation from these findings.
So, what are the tax implications for these compensation payments should you receive one?
The tax treatment is dependent on the character of the payment, the underlying asset and how it was reported in the initial instance. The compensation payment will generally include some or all of the following components:
- Compensation for loss on an investment
- A refund of reimbursement of fees
- Interest component
- Loss on an Investment
The compensation for the loss on an investment has two tax outcomes depending on whether you have disposed of the asset or not.
Read more in our Client Update
We’re ready to assist you. If you have received a compensation payment and wish to discuss the tax implications further, please contact your Accounting Services Director or Manager on +61 3 9820 6400.