James is a technician working with Annes car repair centre. Due to a dangerous workplace accident,James became seriously ill. James received compensation of $131,000. The lump sum was divided into $57,000 loss of earnings, $43,000 loss of future earning capacity and $31,000 for pain and suffering. Based on legal provisions and case law, advise James, will any of these amounts be assessable income?

Furthermore, advise James whether it would be better to accept a lesser sum of $110,000 without any agreed allocation of the funds between current and future earnings and pain and suffering. (Maximum 700 words)