Getting ready to file and I was wondering if someone knew - I am assuming that disbursements taken out of my lump sum retroactive LTD settlement (taxable and non-taxable) cannot be claimed on my return, only legal fees after disbursements? For example, several hundred dollars went to GST Taxable Disbursements (Physicians notes, courier, postage, photocopies, etc.) as well as Non-Taxable Disbursements (Filing fee – Statement of Claim).
I don’t know. The usual rule for income tax is that you pay on the net income so I would have thought that disbursements would reduce the amount of income you have to report, up to the amount you actually received for the settlement. But I am just guessing.
My guess is that you pay tax on the whole lump sum.
Maybe the examples you gave can be claimed as medical expenses?
I don’t know.
Tax was deducted from the actual retro pay prior to it being paid out, and then there is tax on the regular payments from 2018…the solicitor’s fees are listed before the disbursements mentioned, so I just claimed the former…I need to request a special tax calculation at any rate to correctly apply the amounts to the right years, so we’ll see how that turns out. Otherwise it looks like I made a lot in 2018, when that isn’t really the case.
Taxes give me a headache
Best of luck.