Tax on court case settlement money?

summereire

Hi, I haven't been able to find any clear sources on this:

Are court case settlement payments taxable or not? I'm talking about a settlement that is negotiated in the corridor between the parties during the court case and then brought in to the judge, and related to a civil mater and not personal injury or employment related.

Thank you.

GM228

It very much depends on the nature of the award, but generally only damages in the nature of personal injury and some employment law related damages carry a total exemption, compensation for revenue or capital loss for example are usually tax liable.

summereire

Thanks. I've been scouring Revenue's website, and they seem to have a category for everything except this.

There were a series of issues involving damage to property etc, went to the circuit court, and during lunch as it was being heard was settled with a figure that did not relate to any one thing, but just an amount to make the entire case good.

nuac

Mod
I agree with GM228
You should discuss with your solicitor. Nobody could really advise here without seeing all the pleadings.
Will leave open for general discussion subject to forum rules

summereire

Thanks. Any references to guidelines, articles or legislation for this would be much appreciated. I've found surprisingly little while searching, and what I did find seems to relate mainly to personal injuries.

GM228

summereire wrote: »

Thanks. Any references to guidelines, articles or legislation for this would be much appreciated. I've found surprisingly little while searching, and what I did find seems to relate mainly to personal injuries.

As Nuac stated it is difficult to advise without knowing more, but, then we will be touching on the legal advice rule.

There is nothing online that I know of that deals with other than personal injury or perhaps employment law. The Taxes Consolidation Act 1997 is the main source for the legal basis for the various exemptions, but it is a large heavily amended Act and too much to try to discuss here due to so many variables.

Again as Nuac advised a solicitor will advise, also if you contact Revenue they are best able to advise on any liability.

4ensic15

Some elements of damages awards are taxable. If the damages are compensation for loss of earnings, they are treated as if they had been earned and taxed. If some probate actions there may be taxation levied on a damages award which if effectively an inheritance. Before agreeing on a settlement, if there is a possibility of a tax issue, advice would be taken from an appropriately qualified person as to the tax implications and any lawful means of structuring the settlement to minimise the tax burden.
Most solicitors would not be tax specialists but would generally recognise a situation where there are taxation implications and would recommend getting specialist advice.

Mr. Incognito

This is a very technical question

Personal Injuries are exempt from income tax under section 189
http://www.irishstatutebook.ie/eli/1997/act/39/section/189/enacted/en/html

Employment is Section 192A
https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-27.pdf

Go to a solicitor who has a tax qualification or an AITI tax accountant for the particulars of your own award.

Internet advice wont cut it.