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.
Principal Issues: Are lump sum WCB payments in respect of death required to be reported on the T5007?
Position: No.
Reasons: Paragraph 232(4)(e) of the Regulations excludes from reporting payments in respect of "the death of the employee, other than periodic payments made after the death of the employee."
XXXXXXXXXX T. Young, CA
2004-006527
March 25, 2004
Dear XXXXXXXXXX:
Re: Workers' Compensation ("WC") Reporting
We are writing in response to your letter of March 3, 2004, concerning the reporting of WC benefits as a result of a worker's death. We also acknowledge our conversations (Young / XXXXXXXXXX) of March 4 and 9.
In your letter, you note that the T5007 Guide (T4115) only refers to the reporting of death benefits that are paid on a periodic basis. You have asked us to clarify whether lump sum payments are to be included on the T5007 information slip. You have also asked for our views on how to differentiate between periodic payments and lump sum payments made in instalments.
In general terms, section 232 of the Income Tax Regulations (the "Regulations") requires that WC payments be reported on a T5007 slip. However, paragraph 232(4)(e) states that the reporting requirement does not apply to payments made in respect of "the death of the employee, other than periodic payments made after the death of the employee". Consequently, lump sum death benefits do not have to be reported on a T5007 slip.
Black's Law Dictionary (Sixth Edition), defines periodic as follows:
Recurring at fixed intervals; to be made or done, or to happen, at successive periods separated by determined intervals of time, as periodic payments of interest on a bond, or periodic alimony payments.
When determining whether a payment is a lump sum, it is important to consider all of the facts surrounding the payments. In most cases, it will be relatively straightforward to determine if the WC benefits paid are periodic payments or a lump sum. In general terms, with a lump sum, the recipient is entitled to a one-time payment of a fixed amount. The fact that a recipient may receive a lump sum, for example, in three or four instalments during the year does not, in itself, mean that the instalments are periodic payments.
We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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