Is compensation tax free?

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Mike Love

Well-Known Member
25 June 2014
52
2
199
Hi,
I am a mortgage broker and run my business through a Pty Ltd company.
One of the big banks did some dodgy stuff and stole my customer, and I believe they are about to offer me compensation.
The compensation is really for lost commission payments, but also could be for stress and suffering etc. (I am actually about to close my business due to the stress this situation caused)

My question is, if they pay me compensation, if they pay me directly as a person, and not to my company, can we claim it is for "pain and suffering"?

And therefore, is this compensation payment taxable?

Thanks everyone!
 

Rod

Lawyer
LawTap Verified
27 May 2014
7,269
990
2,894
A company cannot claim pain and suffering.

Much depends on how you both agree to classify the compensation. Note the tax office generally takes a dim view of 0% damage/loss and 100% pain and suffering.