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  • Structured settlements

    If you receive compensation as a structured settlement, work out the tax treatment for the elements of your settlement.

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    What is a structured settlement?

    A structured settlement is the result of an agreement between the parties to a personal injury case. A personal injury case may arise from:

    • medical negligence
    • sporting accidents
    • motor vehicle accidents
    • public liability
    • product liability.

    The parties to the case will generally be:

    • you
    • your legal personal representative (a trustee or person with your general power of attorney)
    • the defendant (the person or organisation you are seeking compensation from)
    • the defendant's insurer (in most cases).

    A structured settlement will enable you to take all or part of your personal injury compensation in the form of tax exempt or tax-free periodic payments, rather than a single immediate lump sum payment. Once an arrangement occurs for a structured settlement, you can't change it or cash it out for a lump sum. The components of a structured settlement are outlined in this document.

      Last modified: 09 Jun 2022QC 17073