ACL v CIC Allianz Insurance Limited [2018] NSWDRS MR 064

JurisdictionMerit Review
CatchwordsPre-accident weekly earnings – PAWE – weekly payments of statutory benefits – grossing earnings – loss of earnings – income from personal exertion – self-employed – individual tax return – self-employed – earner – taxi driver
Legislation cited                    Income Tax Assessment Act 1997 (Cth) s 15.10
Motor Accidents Injury Act (NSW) ss 7.12, 7.13, Div 3.3, Schedule 1 clause 3(2)(b), 3(2)(c) & 4(1), Schedule 2 clause (1)(a), 2(a), 3(1), 3(3)
Motor Accident Injuries Regulation 2017
Motor Accident Guidelines effective 13 July 2018
Cases cited


Text citedN/A
Parties ACL - Claimant
CIC Allianz Insurance Limited - Insurer
DisclaimerThis decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

View the certificate

Issued under section 7.13(4) of the Motor Accident Injuries Act 2017

The Claim
Claimant ACL
Insurer CIC Allianz Insurance Limited
Claim Number 37C0000116
The Reviewable Decision
Decision‐maker Coralie Mildwater
Date of decision 6 April 2018
Nature of decision The amount of pre-Accident weekly earnings
The Merit Review
Our Reference 10059435
Merit Reviewer Tami O'Carroll
Date of Merit Review Certificate 23 November 2018

Merit Reviewer's Determination

The reviewable decision is the decision of the insurer about ACL’s pre-accident weekly earnings.
This is a decision that affects the amount of weekly payments of statutory benefits and is therefore a merit review matter under Schedule 2(1)(a)of the Motor Accident Injuries Act 2017.

My determination of the merit review is as follows:

  • The reviewable decision is affirmed

A brief statement of my reasons for this determination are attached to this certificate.

Tami O’Carroll
Dispute Resolution Service Merit Reviewer



1.   ACL was injured in a motor vehicle accident on 4 February 2018.

2.   On 6 April 2018, the insurer issued a decision in which it assessed ACL’s pre-accident weekly earnings (PAWE) at $711.96. ACL sought review of that decision.

3.   On 15 October 2018, the insurer issued an internal review decision affirming its original decision.

4.    ACL lodged an application for merit review with the Dispute Resolution Service which was received on 29 October 2018. He disputes the insurer’s decision about the amount of his PAWE. This is a decision that affects the amount of weekly payments of statutory benefits.

5.   The application has been made in accordance with section 7.12(1) of the Act and the Motor Accident Guidelines (the Guidelines).

Documents and information

6.   I have considered all documents provided and submissions made with the application and the reply and any further information that has been provided to the Dispute Resolution Service. I am satisfied that all information has been exchanged between the parties.


7.   In the application for merit review, ACL’s solicitor makes the following submissions on his behalf:

  • The insurer’s decision about ACL’s PAWE is incorrect. The insurer selectively refers to the Act and does not appreciate the overall legislative intent and guiding principles of the Act.
  • The insurer determined that sub-clause 4(2) of Sch 2 does not apply to the self-employed claimant. There is nothing in the Act or Sch 1 of the Act to support the insurer’s findings that gross earnings are net profits before tax.
  • A self-employed claimant is an earner under clause 2(a) of Sch 2 of the Act. The Act defines loss of earnings in clause 3(1) of Sch 2 as “a loss incurred or like to be incurred in a person’s income from personal exertion”.
  • “Income from personal exertion” is defined in clause 3(2)(b) to include “the proceeds of any business carried on by the person either alone or in partnership with any other person” and in clause 3(2)(c) to include “any amount received as bounty or subsidy in carrying on a business”.
  • Section 15.10 of the Income Tax Assessment Act 1997 (Cth) states “…assessable income includes a bounty or subsidy that (a) you receive in relation to carrying on a business; and (b) is not assessable as ordinary income…”
  • The only exclusions to a claimant’s “income form personal exertion” are provided in clause 3(3) of Sch 2 of the Act.
  • The Guidelines prescribe that insurers are to deal with claims in a manner consistent with the principles and objects of the Act. The insurer’s decision is inconsistent with the general duties under the Act and Guidelines.
  • The Act clearly stipulates that proceeds of any business carried on by a self-employed claimant form part of their income. It does not support the insurer’s decision that PAWE is “net profit earned by a self-employed claimant after accounting for business expenses but before income tax”.
  • The claimant’s gross income should be considered to be $79,546.


8.  The insurer relies on its decision and makes the following additional submissions:

  • The claimant’s PAWE is $711.96.
  • The claimant provided an individual tax return for the year 1 July 2016 to 30 June 2017 which specified total business income of $79,546 and expenses of $42,524. This left a net income of $37,022. This should be divided by 52 weeks resulting in a PAWE of $711.96.
  • It relies on merit review MA01/18. In this decision, the Merit Reviewer states that the claimant’s solicitor miscalculated “gross revenue” in circumstances where they did not deduct business expenses when calculating PAWE. The merit reviewer states “the charted accountant says in relation to self-employed workers, I have interpreted the phrase gross earnings to mean the net profit earned by a self-employed claimant after accounting for business expenses but before income tax. I agree that this is the correct approach to ‘gross earnings’ for the self-employed”.
  • This decision supports that its interpretation of the Act is correct and the original decision is in line with the overall legislative intent.


9.   In conducting my review, I have considered the following:

  • Motor Accident Injuries Act 2017 (NSW) (the Act)
  • Motor Accident Guidelines effective 13 July 2018 (the Guidelines)
  • Motor Accident Injuries Regulation 2017 (NSW) (the Regulation)

Pre-accident weekly earnings

10.  Clause 4(1) of Sch 1 of the Act defines “PAWE” as:

Pre-accident weekly earnings, in relation to an earner who is injured as a result of a motor accident, means the weekly average of the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies.

11. Subclause (2) provides different methods to calculate PAWE in specific circumstances. However, as ACL was self-employed at the time of the accident occurred and he was obtaining earnings during pre-accident period, none of these specific circumstances are relevant. Therefore, ACL’s PAWE is to be determined in accordance with clause 4(1) of Sch 1 of the Act.

12.  ACL has not referred for merit review the insurer’s decision that he is an earner who was injured as a result of a motor accident and there appears to be no dispute in this regard.

13. At the time of his accident, ACL was a self-employed taxi driver. The real issue in this matter is what is included in the “gross earnings” of a self-employed claimant such as ACL, specifically whether business expenses should be included.

14.  The only evidence as to ACL’s earnings that was provided by the parties with the application and reply and that was before the insurer was ACL’s individual tax return for the financial year 1 July 2016 to 30 June 2017. This showed that his total business income was $79,546 and expenses were $37,022. The insurer’s position is that business expenses of $37,022 are not included in ACL’s gross earnings (and therefore not in his PAWE) while ACL’s solicitor argues that they should be included.

15.  Clause 4(1) of Sch 2 requires consideration of “gross earnings received by the earner…”. ACL’s solicitor submits that all “proceeds from the business” should be included in the calculation of ACL’s PAWE. I do not accept this submission. ACL’s solicitor’s arguments are based on the definition of “income from person exertion” in clause 3 of Sch 2 of the Act. The phrase “income from personal exertion” is used in respect of defining what is to be considered a “loss of earnings”.

16.  Whether a claimant has suffered a “loss of earnings” goes to establishing whether or not they have an entitlement to weekly payment of compensation under Div 3.3 of the Act. The weekly payments provisions then go on to specify that if there is an entitlement, the rate of that payment is a percentage of the difference between the claimant’s PAWE and their post-accident earning capacity. The phrase “loss of earnings” is not used in these provisions regarding the quantification of weekly payments.

17.  It is not a “loss of earnings” and therefore not “income from personal exertion” that is under consideration in clause 4(1) of sch 2of the Act, these words could have been used in the clause and these definitions would have applied, but they were not. Instead, clause 4(1) mandates consideration of “gross earnings”.

18.  The term “gross earnings” is not specifically defined in the Act. The Oxford Dictionary defines “earnings” as “money obtained in return for labour or services”. For a self employed worker, I consider that earnings or the return for labour or services are the profits of the business – that is, income less expenses. If follows that I accept the submissions of the insurer and agree with the

view put by the merit reviewer in MA01/18; that for the purpose of clause 4(1) of Sch 2 of the Act “gross earnings…mean the net profit earned by a self-employed claimant after accounting for business expenses but before income tax”.

19.  The tax return provided includes earnings for the 12 months of the 2016/17 financial year, rather than the 12 months immediately before the day of the accident. The parties where therefore provided with a further opportunity to provide evidence of gross earnings during this period.

20.  ACL’s solicitor advised that he has not yet completed a 2017/18 tax return. They provided a Notice of Assessment for the year ending 30 June 2017 which again showed a taxable income of $37,022 for that financial year and Business Activity Statements for July – September 2017 and October – December 2017. The insurer submits in reply that the Business Activity Statements do not assist in the dispute as they do not give an accurate description of the ACL’s earnings.

21.  I agree with the insurer’s submission. The Business Activity Statements provide figures for “total sales” for the business for the quarters mentioned and information to calculate GST paid or payable by the business. They do not provide specific information as to net profit of the business for the relevant quarters. I also note that ACL’s solicitor did not make any submissions as to what his earnings were for these quarters or how his PAWE should be calculated in light of this information.

22.  The Notice of Assessment supports the earnings information contained in ACL’s Individual Tax Return for 2016/17, it also shows business income of $79,546, expenses of $42,524 and a resulting taxable income of $37,022.

23.  I acknowledge that the 2016/17 tax return does not contain information for the whole of the 12 months immediately before the day of his accident and that it contains earnings which are likely to have been earned by ACL prior to this period. However, it does give an indication of his average gross weekly earnings for the first approximately 21 weeks of this period. I consider that the figure of $711.96 arrived at by the insurer is the best indication and best estimate based on the information currently available as to ACL’s weekly average gross earnings for the 12 months immediately before the day on which the motor accident and for the purposes of clause 4(1) of Sch 1 of the Act.

24.  The insurer’s decision of 6 April 2018 is affirmed.

Tami O’Carroll
Dispute Resolution Service Merit Reviewer