Tax Treatment of Compensation Payments and Associated Expenses
Overview
What you'll take away.
How compensation, damages and other settlement payments are treated for tax.
If your client has been the victim of wrongdoing, they may be eligible to receive compensation but often the taxation aspects associated with such receipts are shrouded in mystery and confusion and sometimes are not considered at all until it’s too late. Given that the amounts involved can be substantial, the potential for unexpected tax bills and ATO scrutiny is great. This session considers the tax aspects of payments of compensation and damages, both for the recipient and the payer. Amongst the matters to be covered are the following:
- Wrongful dismissal
- Personal injury settlements
- Workers compensation claims
- Compensation for the disposal of an asset
- Compensation for damage to, or reduction in value of, an asset
- Compensation for advice from financial institutions
As part of the session we will consider:
- Are such payments revenue or capital in nature to the recipient?
- How are capital amounts treated for CGT?
- Apportioning amounts between capital and revenue
- What tax exemptions are available?
- How are payments of interest treated?
- Can the payer claim a deduction?
- GST implications for the payer
In addition, the session will examine the deductibility of costs associated with deriving compensation payments, such as legal fees.
Webinar Learning Outcomes:
Participants will gain an in-depth understanding of how different types of compensation payments are treated for tax purposes and how settlements can be structured to get the best tax outcome for clients.
Suited to:
Ideal for tax practitioners, accountants and other professionals who deal with individuals.
You will also be provided with:
- The PowerPoint Presentation Slide Deck
- A Searchable Transcript
- Any Supporting Documentation
- Webinar Recording to view multiple times for up to 6 months
- Q&A Session & follow up contact details
Course syllabus
3 lessons
- Video – Tax Treatment of Compensation Payments and Associated ExpensesVideo
- FeedbackSurvey
- Knowledge QuizTest
Your presenter
Mark ChapmanH&R Block
has been Director of Tax Communications with H&R Block Australia since 2015. He is also the author of Life and Taxes: A Look At Life Through Tax and has recently edited and updated both the second and third editions of Australian Practical Tax Examples, published in 2019 and 2020 respectively, all published by Wolters Kluwer CCH Australia.
Mark has over 25 years’ experience as a tax professional in both the UK and Australia, specialising in tax for small business and individuals. He is a fellow of the Institute of Chartered Accountants in England and Wales, a fellow of CPA Australia and a member of the Chartered Institute of Taxation. He holds a Masters of Taxation Law with the University of New South Wales.
Mark writes regularly on tax issues for numerous media outlets and presents on topical tax topics at seminars and other events. He broadcasts frequently on radio and television and writes a regular column for Money Magazine and Yahoo7 Finance. As a tax practitioner in the UK, he occupied a number of senior positions before moving to Australia in 2007 to join the Australian Taxation Office (ATO) as a senior director.