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Q: Andy has received insurance compensation from insurance company due to a car accident. He has no income since accident happened, now he wants to use the compensation money to buy a car. Will he be taxed for buying a car with the compensation money?

A: No, it is not taxable as this compensation is capital in nature and is not considered as an income.

Wishing you plentiful tax savings!

Zen Chow

YYC Tax Guru

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