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Fox -V- Wood Claims

In tort law, past economic loss is calculated on what pre-injury salary was not received after taking tax into account i.e. take home pay. Any residual earnings net of tax is deducted but not workers’ compensation payments. When a plaintiff receives common law economic loss damages, the gross weekly benefits need to be refunded to the insurer. Since the refund is the gross receipts, the plaintiff will not have been paid the tax component in the settlement. Fox -V- Wood (1981) 148CLR438 establishes the precedent that the plaintiff is entitled to recover the additional income tax paid in respect of the refundable workers’ compensation receipts.

If there is no post-accident taxable income other than weekly workers’ compensation receipts, the claim is simply the tax paid. Where there are residual earnings the Fox -V- Wood claim is calculated as the difference between the tax on the plaintiff’s taxable income and the tax on the plaintiff’s taxable income less the refundable workers’ compensation. Please note it is actual tax imposts and not withholding tax amounts. The information is needed by financial year from date of accident to date of calculation. This is mostly available from the plaintiff’s tax returns, but the final part year may have to be estimated.

This type of claim will be quantified in the NetActuary economic and super loss report (if relevant). The same applies to the cost of funds management if applicable. The cost of these reports is $440 inclusive of GST. Please contact Brian@netactuary.com.au for more details.

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