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Do I Have to Pay Income Taxes on My ICBC Injury Claim Settlement?
Well folks, it’s that time of year again, tax time. Â Time to figure out how much we’ve all earned and make sure that we pay the Government their cut.
If you settled a tort claim from a BC motor vehicle collision do you have to pay income taxes on the amount? Â The short answer is no.
Generally a personal injury settlement covers a lot of areas which are not taxable, for example money for pain and suffering and loss of enjoyment of life, past medical expenses, future medical expenses. and so on. Oftentimes a settlement also includes money for past/future wage loss (also known as awards for diminished capacity). Â You would think this portion of a settlement would be taxable but it is not. Â The reason being that there is a restriction limiting past wage loss awards from BC motor vehicle accident tort claims to “net income”. Â This restriction is set out in s.98 of the Insurance (Vehicle) Act which reads as follows:
You can click here to read more about the net income tax restriction for past wage loss awards in bc motor vehicle accident litigation. Â As a result of s. 98 the amount of tax payable is already deducted before judgement/settlement making the money non-taxable.
Tags: are icbc claim settlements taxable, bc motor vehicle accident claims, net income awards, past wage loss, section 98 insurance (vehicle) act, tax consequences and bc motor vehicle accident tort cla
This site is created by MacIsaac & Company, a British Columbia Personal Injury Lawfirm. This website is not affiliated in any way with the Insurance Corporation of British Columbia (ICBC).This web site is made possible through funding provided by the British Columbia law firm MacIsaac and Company. bc-injury-law.com is designed to empower individuals to better understand their ICBC Claim and the process involved in dealing with ICBC. This web site is offered for information only and is not claim-specific legal advice. Use of the site and sending or receiving information through it does not establish a solicitor / client relationship. Links to and from this website do not state or imply a relationship between MacIsaac and Company and the linked entity.
June 14th, 2010 at 1:40 pm
Very helpful. I found myself frequently browsing your site archives during my recent interaction with ICBC in order to educate myself about the process and potential variables. Should I find myself in a situation where I have to sue ICBC again, I will certainly consider your firm for my representation. Thank you for all of the comprehensive information!
Regards,
A.M.Noyes
June 14th, 2010 at 9:59 pm
You’re welcome Adrienne. Thanks for visiting and your kind comments.
Yours truly,
Erik Magraken
February 25th, 2011 at 7:49 am
[…] from this fund to pay for their future care needs over their lifetime. Â The difficulty is that while personal injury damage awards are not taxable, investment income is. Â To account for this Trial Judges have the ability to award further damages […]