Are Slip and Fall Settlements Taxable?

0
23

Stephen Yung

Partner

Email address: [email protected]

Phone: 604 697 3999

Simpson, Thomas & Associates

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 injuriesand includes:

  • “Special damages;” including out-of-pocket expenses such as medical and hospital expenses, 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. A slip and fall settlement is not taxable when you initially receiveit, but income earned on an investment is taxable income (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 complex and cause severe, 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. Call us today at (604) 229 6448or fill out our online form on www.simpsonthomas.com to request a free consultation.