Is my Compensation Payout Taxable?
- 26 Mar 2019
Compensation lawyers are commonly asked “do I have to pay tax on my compensation payout?”.
The short answer is no.
Under the Income Tax Assessment Act 1997, the payment of a lump sum amount in relation to a motor vehicle accident, workers' compensation or slip & fall compensation claim is not assessed as income and does not need to be included in your tax return.
This means you do not have to pay tax on any lump sum compensation payout you receive. There is also no Capital Gains Tax payable on a compensation payout.
If you earn any interest on the lump sum payout, the interest is taxable income and must be included in your tax return and you must pay tax on it.
This is a brief summary and is not intended as financial or accounting advice. Firths The Compensation Lawyers recommend that you seek financial or accounting advice appropriate to your circumstances.