QUESTION: "Are my ICBC settlement funds taxable?"
ANSWER: When you receive a settlement from ICBC, even if it is partly for past wage loss, you do not have to pay any taxes.
If you are receiving ICBC Part 7 disability benefits, you do not have to pay taxes on that amount either.
Why not? Firstly, when ICBC calculates any lost wages attributable to the car accident they reduce the amount owing based on the taxes you would have paid if you had received that income. In other words, they will reduce the amount owing in wages by your appropriate tax bracket. This is done before the settlement of the claim.
Secondly, non-pecuniary general damages (pain and suffering money) is not taxable pursuant to the Income Tax Act.
Another interesting tax implication is that if you received a large future income loss award, you may be entitled to a tax gross up award which gives you extra money because of the long-term tax implications of investing your settlement funds for the long-term.
Do you have questions about your ICBC personal injury claim or accident? If so, click here arrange your free consultation with ICBC Claims Lawyer Perminder S. Tung (Services provided for ICBC injury claims throughout all of BC: Vancouver, Surrey, Langley, Burnaby, Richmond, Abbotsford, Chilliwack, Tri-city area and all over BC)
I just received a settlement of 430 000 from icbc i am told i have to pay tax bein disable i have no income so it will be deducted from my settlement is this really the law can i get the tax money backReplyDelete
Thanks so much for a great post. I'd like to know more about these topics and hope that I can receive more insight into this topic.ReplyDelete
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