Simple Economic loss applies one level of probable earnings over the period from the date of the accident to the date of hearing (past economic loss) and from the date of the accident to the retirement age (future economic loss).
Past Economic Loss
Past economic loss is calculated as the difference between the plaintiff’s probable net earnings if not for the accident and the plaintiff’s net post accident earnings. Earnings are entered as gross before tax, Lawcalc applies the correct rate of tax for the relevant year.
Future Economic Loss
Future economic loss is calculated as the difference between the present value of the plaintiff’s net probable earnings if not for the accident and the present value of the plaintiff’s net residual earnings of not for the accident. Future economic loss is discounted accordingly to the relevant discount rate as determined by legislation or common law. Tables of the various discount tables are available under the schedules tab
above. A factor for vicissitudes can also be applied to future economic loss calculations.
Legislative Restrictions
Where applicable, the various legislative restrictions that apply to economic loss are also applied. A
detailed list of the legislative restrictions is available in the legislation tab above. Some of the legislative restrictions that apply are limits on probable earnings, limits on retirement age, thresholds with respect to days since the accident and discount rates.
The limits in respect of probable earnings (such as three times average weekly earnings) have been not applied at this stage due to a number of cases before the courts in respect of the interpretation of the relevant sections.
Taxation
Tax has been applied on the basis of the plaintiffs earnings in a particular year. Changes in tax rates have been taken into account. Tax on part year earnings is applied on a prorata basis.
The variables in simple economic loss scenario are as follows:
| Scenario Name | This is a simple name to describe the scenario and differentiate it from other scenarios that have been created. |
| Scenario Description | This is a long description that is used to provide more detail about what the plaintiff’s economic loss is based. For example “Based on average of pre-accident tax returns for the years ended 30 June 2006 – 2008” |
| Probable Earnings | The plaintiff’s gross weekly earnings if not for the accident. |
| Future Residual Earnings | The plaintiff’s future residual earning capacity expressed as gross per week. This only applies for future economic loss. |
| Report Type | Past, Future or Past & Future. This is to select whether the scenario will apply past loss only, future loss or both past and future loss. |
| Retirement Age | The plaintiff’s retirement age. This determines when the plaintiff’s economic loss will finish. Default is 65. |
| Start Work Age | This is used for people whose earnings may not start for a number of years, such as students, mothers returning to work etc. Where the start work date is less than the date of the accident, the date will have no effect. The default is 18. |
| Super Method | The method by which loss of superannuation is calculated. The only option is contributions only. The Cremona methodology is not applied. |
| Vicissitudes | The deduction that will apply to future economic loss calculations for the vicissitudes of life. The default is 15% |
