Not sure about the rest of the world but in Australia it is highly dependent upon the type of insurance and the items being insured and whether it is personal insurance or business insurance. This should not be construed as advice, but just as an sketchy outline of the broad principles here. Consult the ATO or and tax authorities in your jurisdiction and your CPA .
E.g. Income protection insurance payouts and where it is compensation for the occurrence of a specific event would generally be regarded as income and taxed as income. For lump sum payments in arrears there are provisions here for apportioning the payout to the years the income they replace would have been received in and taxing at the rates relevant for that year. All other insurance payouts are generally regarded as being capital in nature. In this case the tax treatment varies depending upon whether the asset is disposed of (destruction or loss- depends whether there was a capital gain or loss - asessed for capital gains tax), retained with a permanent reduction in value (compensation is generally regarded as a reduction in the assets cost base), compensation received on the disposal of a right to seek compensation (e.g. liabilities arising out of negligence - compensation is usually equal to costs incurred and no capital gain or loss in incurred - no CGT), compensation for any other act, transaction or event (covers things like life insurance payouts, injury and sickness policies - these are normally exempt from capital gains provisions). This is covered by several different provisions of various taxation acts and taxation rulings - i.e. it is very complex. Many policies also may have components which are income in nature and others which are capital in nature so proceeds in a particular case have to be broken down into the specific components and treated accordingly. Insurance payouts for personal items are not generally taxed under income provisions unless the items insured are income producing. My guess is other jurisdictions will have similar broad principles but are likely to differ significantly in the detail and mechanisms. You really need competent professional advice in dealing with this. David Cousens ----- David Cousens -- Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
