financial EVIDENCE
In any claim for personal injuries it is crucial that you be able to provide evidence of your earnings both prior to and following the injury.
This is because out of all the various ‘heads of damage’ (categories) you can recover under a claim, economic loss is often then single largest category in terms of the amount of compensation you can recover.
Section Resources
- 1ATO Tax Document Request Form
- 2Fair Work Ombudsman Website
- 3Letter to Employer Requesting Complete Employee Records;
- 4Example Witness Statement;
- 5Letter to University/ Tafe/ Training Organisation Requesting Academic Records
Symbol Guide
RESOURCE
HOW TO
IMPORTANT INFORMATION
CASE STUDY
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Avoid the Insurance Runaround & get your claim paid quickly.
After a car accident, you're most likely out-of-pocket for repairs or medicals, and frustrated that you're paying for someone else's mistakes.
But you don't have to be.
Get on the phone with someone who knows how to get action and payment from an insurance company. In minutes you could have a clear plan of what to do, what to say, and what comes next.
By this time next week you could have your claim sorted and money in your bank. It beats being put on hold forever by an insurer paying the delay game at your expense.
It beats being put on hold forever by an insurer paying the delay game at your expense.
Types of financial evidence
What sort of financial evidence can be used to support my case?
The best way to provide evidence in support of your case is to obtain copies of the following documents from the ATO:
If you are self-employed, then you will also want to obtain copies of the following documents:
The ATO will have electronic copies of the above documents which you can obtain by simply submitting a Tax Document Request Form.
Alternatively, if you have an accountant or tax agent they should be able to provide you with copies of these documents on request.
IMPORTANT TIP
The courts will ask questions around how your injuries have impacted you financially.
How do I submit a tax document request to the ATO?
To request copies of your Tax Returns, PAYG Summaries and Notices of Assessment you simply need to submit a ‘Copies of Tax Documents Request Form’ to the ATO.
A blank copy of this form can be downloaded from the ATO website.
HOW TO FILL OUT THE TAX DOCUMENT REQUEST FORM
To complete the ATO Tax Document Request Form you will need:
When filling out the form, you also need to make sure that you indicate on the form that you are seeking copies of your documents for at least three (3) financial years prior to your injury, as well as any financial years post injury.
For example, if you were injured on 10 January 2016, you would need to request documents for the 2013/14, 14/15 and 15/16 financial years (i.e. the three years prior to your injury), as well as documents for the 2016/17 financial year (i.e. the year following your injury).
Once you have filled out the form, you then need to either fax this to the ATO on 1300 730 298 or mail it to the following address:
Australian Taxation Office
PO Box 3006
PENRITH NSW 2740
Proving financial loss
Why do I need these specific documents?
As a first step in determining the amount of economic loss you are likely to suffer, courts will:
If your injury has stopped you from working for a period of time or indefinitely, then these documents should show a loss or decrease in your earnings following the injury, compared with prior to the injury.
IMPORTANT TIP
You can point to this difference in earnings, in connection with medical evidence, to show that your injury has caused you to suffer economic loss.
What is economic loss?
There are two categories of Economic Loss you can recover in a PI claim:
- 1Past Economic Loss – which refers to any loss of earnings from the date of your injury until the date you resolve your claim; and
- 2Future Economic Loss – which refers to the total loss of income you are likely to suffer from the date you resolve your claim until you reach retirement age of 67.
Past Economic Loss is calculated mathematically by comparing the income you earned prior to the injury with the income you received after the injury.
This might be zero if you didn’t take any time off following your injury or earned more money than you did in previous financial years.
Calculating Future Economic Loss is more complicated. Essentially this involves projecting your losses forward over the course of your working life based on your reduction in earning capacity due to your injury.
In addition to your tax documents, you will also need medical evidence to prove there has been a reduction in your earning capacity due to your injuries.
Typically this is in the form of a specialist report from an orthopaedic surgeon, neurologist, psychologist or occupational therapist.
What if my tax documents don't show a loss?
If your economic loss cannot be calculated by comparing your pre-accident and post-accident tax documents, i.e. if your tax documents don’t show a loss, then you will need to point to some other evidence in support of your claim.
This might include:
How do I request records from my current/past employer?
If you’re a private sector employee then your employer has obligations under the Fair Work Act 2009 to keep records relating to your employment for seven years, regardless of whether you’re still employed by them.
Under this legislation, your employer must keep records of amounts paid to you, hours worked, leave records, superannuation contributions and termination records.
If they don’t they can be fined by the Fair Work Ombudsman.
Your employer also has a legal obligation to provide this information to you on request, so you simply need to write to them and request copies of the records you are seeking.
What about Queensland Public Sector employees?
If you’re a Queensland public sector employee then your employer will have similar obligations under the Industrial Relations Act 2016 to:
QLD Government employers also have additional obligations under the Right to Information Act 2009 and Information Privacy Act 2009 to provide you with access to these records.
In practice, most Queensland Government Departments will have an administrative access scheme in place to facilitate access to your employment records.
For the purpose of actually requesting these documents from your employer, the above letter should work regardless of whether you’re a public or private sector employee.
What if my employer won't provide access to these records?
If a private sector employer refuses to allow you access to your employment records then they are in breach of the Fair Work Act 2009. You should contact the Fair Work Ombudsman and report the issue.
The Fair Work Ombudsman can help by:
You can contact the Fair Work Ombudsman online.
You will need to register an online account before submitting your request for assistance. To do this simply click the link that says ‘Register for My account now’ at the bottom of the page. Once your account has been created you will be able to submit your request for assistance.
What about HR records?
Unfortunately private sector employers have no legal obligation to disclose your HR Records to you unless you have a court order compelling them to do so.
This is a catch 22 situation because in order to get the court to issue a notice of non-party disclosure you need to have commenced court proceedings against the other party.
Unfortunately, you can’t actually commence court proceedings until after you have been to a compulsory conference with the insurer and attempted to settle your claim.
Since the whole point of attending a compulsory conference is to settle your claim anyway, you may never get to the point of having to actually commence court proceedings.
This means that Employers are completely within their rights to refuse to hand over your HR Records and there is nothing you can legally do to force them into handing this over.
The best practical advice for this situation is to explain the situation to your Employer and make clear why the records are important for your case. Generally, most employers will be willing to help you out if you explain that you’re in a tight spot and why you need access to these records.
Alternatively, if you’re a Queensland Government employee then your department will generally facilitate access to relevant HR records under an RTI request.
How do I obtain a witness statement from my employer/colleagues/staff?
how to obtain WITNESS STATEMENTS FROM eMPLOYERS/COLLEAGUES/STAFF
While no one is legally obliged to provide a statement to you, most people will usually be willing to help if you explain the situation and why you need their assistance.
A good practical tip for convincing someone to provide you with a statement is to simply have the statement pre-drafted for them and ask if they would be willing to sign it. Most people are generally happy to help and the easier you can make the process for them the greater the chance they will say ‘yes’.
Some key points you will want to cover in the statement include:
Once your witness is satisfied with the statement you have drafted, you’ll simply need them to sign and date the bottom of each page. Then your statement is ready to submit as evidence to the insurer.
What about academic records?
Most academic institutions have their own internal policies about when they will and won’t disclose copies of your academic records. Generally speaking however, most institutions are happy to provide you with copies of your records on request.
When should I be requesting these records?
There is no specific time frame as to when you should send out these requests, however generally it’s best to request them as soon as possible in case you run into any unforeseen delays.
What if I still can't prove I suffered a loss after obtaining these records?
If, after obtaining all of these documents it is still not possible to identify that you have suffered a loss then you may need to engage a forensic accountant to go through your financials and identify your economic loss in a forensic accounting report.
This situation usually applies to self-employed people whose business income has increased regardless of them not being able to work due to the injury e.g. if you hired additional workers and this resulted in your business becoming more profitable. In this situation your labour costs may have increased in-line with the business income and no loss may be discernible on paper.
Getting forensic accountants involved can be costly and may or may not be worthwhile depending on the circumstances of your claim.
IMPORTANT REMINDER
Proving you suffered financial loss is important as economic loss is often the most significant part of an injured party’s claims. However, there are many other categories under which you can claim compensation for. Your claim is not lost if you find you haven’t lost income.
I haven't lodged tax returns/I didn't declare some or all of my cash income
If you haven’t lodged tax returns, or have only declared a small portion of your income to the ATO, e.g. in the case of a cash business, then this can create real problems for your claim.
The CTP insurer will likely try and argue that your economic loss should be calculated based on your tax documents, which means that they could offer you a lower amount than the true value of your claim, or possibly nothing at all.
In this situation you essentially have two options:
- 1Try and obtain other evidence of your earnings e.g. pay slips, invoices, statements from colleagues/ clients about the amounts you were earning and argue a loss based on this evidence; or
- 2Lodge/ Re-lodge updated tax returns with the ATO declaring your true income (inclusive of any cash payments). You need to tread very carefully in this situation.
Whilst it is not necessarily fatal to your claim to retroactively declare income, this can seriously damage your credibility in the eyes of a court if not handled properly.
The ATO will also pursue you for any tax monies owed to them as a result of your updated returns, which can create additional financial pressure if you are already not working because of your injury.
What happens to my taxable income if I get a payout?
Generally speaking if you settle your claim or are successful at trial, the money you receive is tax free.
One exception to this however is if the above applies and you owe the ATO back taxes for income not previously declared. In this situation, the ATO may agree to postpone recovery of any tax liabilities until settlement of your claim, which means you will have to refund the ATO all of the tax monies they are owed out of your damages.
How will my Centrelink payments be affected/will I have to repay Centrelink?
If you have received Centrelink payments whilst your claim is on foot, you will have to repay Centrelink some or all of these payments. This is to prevent you receiving double compensation.
If you are receiving any of the following payments whilst your claim is on foot you may end up having to repay Centrelink:
If you have received any payments from Centrelink, even payments which aren’t listed above, you must contact them and notify them of your intention to bring a claim. You can claim any refund owing to Centrelink from the Insurer as part of your damages so that you are not out of pocket, however if you fail to notify them you may end up having to reimburse them out of your own damages,
In practice, Centrelink use the following 5 step mathematical formula to calculate the repayment owed to them upon finalisation of your claim.
HOW TO FILL OUT THE TAX DOCUMENT REQUEST FORM
- 1Centrelink will first assume that 50% of the total value of your claim is for loss of earnings, even if the portion of your claim for loss of income is less than this. Unfortunately this 50% rule cannot be challenged.
- 2They then take this 50% and divide it by the cut-off limit for a single rate pension under the current income test (currently $1983.20 per fortnight). This gives Centrelink the number of weeks that you will be precluded from receiving Centrelink payments, known as the Preclusion period.
- 3Centrelink then apply the preclusion period form the day of your accident and project it forward for the amount of weeks calculated in the above formula.
- 4If the end date of the preclusion period is prior to the date you resolve the claim, you will have to repay all of the payments you received within that period of time.
- 5If the end date for the preclusion period falls after the date you resolve your claim, then you will have to repay all of the payments you received until the date you resolve the claim, and you will also be precluded from receiving ongoing payments until the preclusion period ends.
CASE EXAMPLE
By way of example, if Lachie was injured on 1 January 2017 and he settled your claim on 1 January 2018 for $200,000, his preclusion period would be calculated as follows:
50% of $200,000 = $100,000
$100,000 / $1983.20 (fortnightly single rate pension income test) = 50.42
50.42 x 2 = 100.84 weeks
100.84 weeks from 1 January 2017 is 8 December 2018
Lachie would have to repay Centrelink for any payments received between 1 January 2017 and 1 January 2018 and he will precluded from receiving further payments from Centrelink until 8 December 2018.
In practice, once you notify Centrelink of your claim they will send you a notice stating the amount they expect to be paid back.
IMPORTANT TIP
Make sure you don’t forget to include our Centrelink payments as part of your claim otherwise you may end up getting less than you are entitled to receive from the Insurer.
Avoid the Insurance Runaround & get your claim paid quickly.
After a car accident, you're most likely out-of-pocket for repairs or medicals, and frustrated that you're paying for someone else's mistakes.
But you don't have to be.
Get on the phone with someone who knows how to get action and payment from an insurance company. In minutes you could have a clear plan of what to do, what to say, and what comes next.
By this time next week you could have your claim sorted and money in your bank. It beats being put on hold forever by an insurer paying the delay game at your expense.
It beats being put on hold forever by an insurer paying the delay game at your expense.
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