TAX IMPLICATIONS: BANKING ROYAL COMMISSION COMPENSATION PAYENTS
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
Our latest newsletter article looks at each of these components and what needs to be considered with the tax implications.