Oscar severely injured his spine in a motorcycle accident which resulted in him becoming a paraplegic. As a result he consulted a lawyer and was successful in obtaining a compensation payout of $300,000 from his insurance company. In addition to the lump sum payment, Oscar received pre-judgment interest of $30,000. The insurance company appealed the decision in a higher court, however the original decision was confirmed and a further $5,000 of interest was awarded by the court. The insurance company therefore paid Oscar an amount of $335,000 immediately following the final decision.

What amount should Oscar include in his assessable income as a result of these receipts?

Answer rating: 100% (QA)

The tax treatment of compensation payouts can vary depending on the jurisdiction and specific circum... View the full answer