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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Whether our position on pre-judgement interest with respect to awards for wrongful dismissal has changed
Position: Not changed. Pre-judgement interest received as part of a wrongful dismissal award is not taxable.
Reasons: Consistent with prior opinions
XXXXXXXXXX 2003-000355
Wayne Antle
March 26, 2003
Dear XXXXXXXXXX:
Re: Pre-judgment interest
This is further to your letter of February 17, 2003, concerning whether our administrative position on the tax treatment of pre-judgement or pre-settlement interest (hereinafter referred to as pre-judgement interest) included in an award for wrongful dismissal remains the same as that outlined in an earlier technical interpretation issued by this Directorate (File No. 9824890).
Our longstanding position on the taxation of pre-judgment interest has not changed. Pre-judgment interest is generally required to be included in income pursuant to paragraph 12(1)(c) of the Income Tax Act. However, there is an administrative exception for pre-judgment interest related to an award for personal injury or death, wrongful dismissal, or retroactive worker's compensation payments wherein such interest is not subject to tax. If our position should be amended in the future, any such change will be clearly communicated through an Income Tax Technical News Release, or an announcement at a major tax conference.
We trust that our comments will be of assistance.
Yours truly
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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