Once they settle their car accident settlement, a lot of personal injury claim victims suddenly find themselves asking, “Is the money I receive from the insurance company taxable?”
We turned to chartered public accountant Drew Tetz, with the accounting firm Tetz Powell Professional Corporation, to answer this common personal injury claim question.
Tezt: “Personal injury claim settlement income is typically not taxable in Canada under subsection 81(1)(g.1) of the Income Tax Act.”
Tezt: “Settlements intended to compensate victims for lost earnings or loss of future earnings, are also not taxable.
This includes income that you would to have otherwise pay tax on, such as a wage.”
Tezt: “Insurance claims that result from a motor vehicle accident are typically not taxable in Canada.”
Drew Tetz CPA, CA
Drew Tetz CPA, CA is a Partner at Tetz Powell Professional Corporation, a boutique accounting firm offering specialized tax planning solutions for individuals and business owners