In personal injury litigation, discount tables are used to determine the lump sum value of a future loss of earnings.
There are two discounts tables generally used:
- Weekly Multiplier – the present value of $1 per week for n number of years discounted at a discount rate (i).
- Deferred Multiplier – the present value of $1 received in n years discounted at discount rate (i).
So how do we use the multipliers.
Example 1 – Use of Weekly Multiplier
The plaintiff is deemed to suffer a loss of earning capacity of $500 per week for 20 years. The loss is calculated as follows:
$500 x 666.4 (5% weekly multiplier for 20 years) = $333,200.
Example 2 – Use of Deferred Multiplier
The plaintiff will suffer a loss of $100,000 in 10 years time. The loss is calculated as follows:
$100,000 x 0.614 (5% deferred multiplier for 10 years) = $61,400.
Example 3 – Combined Weekly and Deferred
The plaintiff will suffer a loss of $500 per week from age 45 in 10 years time to age 65.
$500 x 0.614 (5% deferred multiplier for 10 years) x 666.4 (5% weekly multiplier for 20 years) = $205,585
We have a free Discount Multiple calculator at http://www.dolmanbateman.com.au/online-tools/discount-tables/.
Discount Rates by Legislation
The discount rates used are dependent upon the relevant legislation. The current discount rates for NSW and Victoria are:
| Legislation | Section | Discount Rate |
| NSW – Motor Vehicle Accidents Compensation Act 1999 | s.127 | 5% |
| NSW Civil Liability Act 2002 | s.14 | 5% |
| NSW Workers Compensation Act 1987 | s.151J | 5% |
| VIC Transport Accident Act 1986 | s.173 | 6% |
| VIC Wrongs Act 1958 | s.28I | 5% |
| VIC Accident Compensation Act 1985 | s.134AB | 6% |
| Arnold Shields is a Director of Dolman Bateman & Co Pty Ltd, Forensic Accountants and Chartered Accountants. He specialises in forensic accounting and business advice. |
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