6 July 1995 External T.I. 9514865 - XXXXXXXXXX SETTLEMENT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Mr. Gordon R. White

Director
Financial Operations and Special Projects 951486
Agriculture Canada A.M. Brake
Ottawa, Ontario
K1A 0C5

Attention: April Steel

July 6, 1995

Dear Sirs:

Re: XXXXXXXXXX Settlement

This is confirmation of the verbal response given earlier to your letter of May 31, 1995 requesting our comments as to the taxability of payments to producers from the above-noted settlement.

XXXXXXXXXX

We confirm that payments to the XXXXXXXXXX producers constitute income in the hands of the recipients in the year the payments were received. In accordance with the comments contained in paragraph 4 of Interpretation Bulletin IT-182, the amounts in question represent compensation for loss or destruction of inventory or for loss of profits and are considered to be income from the carrying on the business of farming. In any event, these amounts are within the purview of paragraph 12(1)(x) of the Income Tax Act unless they are included in income by virtue of section 9 and, if so elected, section 28 of the Act.

In our view, these payments fall within the ambit of section 234 of the Income Tax Regulations. Accordingly, it will be necessary to report these amounts on AGR-1 Slips.

We trust our comments will be of assistance to you.

Yours truly,

R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch