A recent Supreme Court case has illustrated the distinction between compensation for psychological damages and employment income.
In Susan Buswekk v TAL*, the Plaintiff, Ms Buswekk, was granted $300,000 damages for psychological injury arising out of her employment.
Ms Buswekk also claimed monthly benefits as part of her income protection insurance from her provider, TAL.
The insurer contended that Ms Buswekk was not entitled to her income protection payments as the $300,000 damages was, in the insurer’s view, considered “employment income”.
However, the Supreme Court of NSW ruled that damages of this kind are not to be taken as taxable income, rather, ‘upon the ordinary conception of what is income and what is not income’ the psychological damages should be considered compensation for a loss of a capital asset.
Compensation law can be complex and stressful. If you have suffered an injury at work, or due to the fault of someone else, and require legal assistance contact our expert team on: (02) 4902 3800
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* NSWSC 1507