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Vanessa said: 18 April 2016 at 15:52 One of our employees who earns approximately R57000 a year has received a pay out from the Road Accident Fund of R217657 for an accident he was involved in. He wants to know what the tax implications are on the amounts so that he can put aside funds for the end of this tax year. |
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TaxTim Alicia said: 19 April 2016 at 9:52 It depends on the nature of the payout - - is to compensate for personal injury or loss of capacity or ability to continue to function as before the accident? - is it to compensate the recipeint for a loss of income? - is it to reimburse the recipient for expenses suffered as a result of the incident? |
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Vanessa said: 19 April 2016 at 10:05 It is to reimburse the recipient for expenses suffered as a result of the incident and for personal injury. Thanks. |
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TaxTim Alicia said: 19 April 2016 at 10:20 The reimbursement for personal injury would not be taxable - therefore there are no tax consequences. Regarding the reimbursement of his expenses - if the expenses were originally claimed for tax purposes, then the reimbursement would be included in gross income and be taxed normally. However, if they were personal expenses that were reimbursed and therefore not claimed for tax purposes, the reimbursement would also not attract tax. |
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