Do I Have to Pay Income Taxes on My ICBC Injury Claim Settlement?
Well folks, it’s that time of year again, tax time. 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? 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). You would think this portion of a settlement would be taxable but it is not. The reason being that there is a restriction limiting past wage loss awards from BC motor vehicle accident tort claims to “net income”. 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. As a result of s. 98 the amount of tax payable is already deducted before judgement/settlement making the money non-taxable.