If you follow our blog, you are aware that we recently explained how slip and fall settlements are calculated and the types of compensation you can expect from a slip and fall accident. The next big question we answer in this post is whether compensation for a slip and fall injury is taxable or not.
Do You Have to Pay Tax on Slip and Fall Compensation?
The general rule is that slip and fall compensation is not taxable. Damages for personal injury claims are not considered income by the Canada Revenue Agency (CRA); therefore they are exempt from income tax. This tax exemption applies to compensation for physical and/or mental personal injuries and includes:
- “Special damages;” including out-of-pocket expenses such as medical and hospital expenses, and future loss of earnings; and
- “General damages;” for pain and suffering, loss of amenities of life, loss of earning capacity, shortened expectation of life, and the loss of financial support caused by the death of a supporting individual.
The tax exemption for personal injury damages applies regardless of whether the amount you receive is paid pursuant to an out-of-court settlement or in accordance with a court order made by a judge or jury after trial. It also doesn’t matter if the compensation is paid as a one-time lump sum or over time in periodic payments through a structured settlement. As long as the amount paid arose from a claim for damages for personal injury or death, it is not taxable as income when received, even if the damages were calculated with reference to your loss of earnings.
Be warned, however, if you are considering investing your personal injury compensation after you receive it. A slip and fall settlement is not taxable when you initially received it, but income earned on an investment is taxable income when received (for example, interest, dividends, or capital gains earned if you invest the money you received as compensation for your injuries). Professional tax advice tailored to your circumstances is always recommended, particularly if you have received a large personal injury award.
Get Legal Advice from STA’s Experienced Lawyers
Slip and fall accidents can be very complex and cause serious, life-changing injuries. If you have been hurt in a slip and fall, the best course of action is to get legal advice from an experienced personal injury lawyer. At Simpson, Thomas, & Associates, we have appointments available at our offices in Surrey/Delta and Vancouver. STA’s personal injury lawyers can come to you if the slip and fall has caused mobility issues. Call us today to schedule a free initial consultation to discuss your claim, or fill out to consultation form now.
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