The taxpayer sustained various injuries at work and, as a result, ceased manual labouring. His work contract was terminated shortly afterwards, as it was deemed he was no longer fit to return to active work.

The taxpayer commenced litigation with regard to the injuries sustained at work and was awarded various amounts of compensation, including two sums of aggregated arrears payments to compensate for weekly earnings.

The Commissioner assessed these sums as ordinary income.

The taxpayer appealed the amended assessment. However the AAT held that the two amounts were payments of ordinary income and the Commissioner's assessment was upheld.