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Treatment of compensation payments and damages awards paper

Published on 07 Oct 06 by VICTORIAN DIVISION, THE TAX INSTITUTE

Suppose a client is offered compensation either for his consent to the cancellation of valuable rights, or to settle a claim for personal injury or unfair discrimination. To deliver the best after tax outcome tax practitioners need to be aware of the possible pitfalls. This presentation considers a number of practical case studies exploring:

  • how damages, costs and pre and post judgement interest are taxed
  • when they are deductible on ordinary principles or under the new black hole expenditure provisions
  • when they are consideration for taxable supplies or give rise to an entitlement to an input tax credit
  • indemnities, damages for breach of warranty, reimbursements and liquidated damages clauses in contracts
  • difficulties arising when taxation of damages becomes an issue in the conduct of litigation.

Author profile:

Michael Hines
Michael is an experienced practitioner at the Victorian Bar, specialising in taxation and commercial law. He is also a senior fellow of the University of Melbourne having taught post-graduate courses in income tax and State taxes. Michael previously worked at Allens Arthur Robinson as Tax Counsel and then Special Counsel specialising in income tax, GST, tax audits and tax litigation. Current at 01 February 2007 Click here to expand/collapse more articles by Michael HINES.
 

This was presented at 45th Victorian State Convention: Finding buried treasure.

Get a 20% discount when you buy all the items from this event.

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