Tax Implications of the Settlement
Fortunately, when you receive a settlement from ICBC, even if it is partly for past wage loss, you do not have to pay any taxes.
If you are receiving ICBC Part VII disability benefits, you don’t have to pay taxes on that amount either.
In calculating the past wage loss claim, ICBC is able to reduce the amount based on the taxes you would have paid if you had received the income. This is done before the settlement of the claim.
If you received a large future award in your ICBC claim you may be entitled to a tax gross up award which gives you extra money because of the long-term tax implications of investing your settlement funds for the long-term.