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_Lilly20(Initiate)Initiate
20 Sept 2021

Hello I have been disabled since 2017. I had private TPD and income protection policy which I submit a claim BACK in 2017.The insurer paid me Settlement amount of $500000. The amount include $100000 TPD and rest is part of income protection payment between 2017 and 2040. The insurer did not agree to pay the full income protection amount that was stated in my policy. Only 40 percent of that was paid. I also have to pay $120000 to my lawyers out of this settlement. My question is is this lump sum taxable?How would tax apply to this amount?I am totally disabled and not be able to work at all. This amount would cover my debts and living cost for the next 20 years.Thank you

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719 views
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JodieR_ATO(Community Support)Community Support
ATO Certified Response21 Sept 2021

Hi @Lilly20,

If you settle a personal injury claim, or if a court orders in your favour, you may receive compensation, either as a lump sum payment or periodic payments, or both. These payments are usually tax-free, provided that certain conditions are met. Please review Structured settlements - information for injured people.

If you require further information about compensation for personal injury, you can write in for a private ruling.

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