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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Structured Settlements U.S. Personal Injury Claim
We are replying to your letter of August 16, 1993 in which you ask us to provide Interpretation Bulletins and other published material which would assist you in setting up your request for an advance income tax ruling relating to the situation which you have briefly described in your letter.
Enclosed for your information are the following published material.
a) A copy of Information Circular 70-6R2 dated September 28, 1990 and Special Release thereto dated September 30, 1992. This circular explains the circumstances under which a ruling may be provided and other pertinent information relating to the procedure to be followed in requesting a ruling.
b) A copy of Interpretation Bulletin IT-365R2 dated May 8, 1987 covering Damages, Settlements and Similar Receipts (see paragraph 5 in particular which deals with structured settlements).
c) Published Advance Income Tax Rulings ATR-40 and ATR-50 which should be of assistance in setting up your ruling request.
In our telephone conversation (XXXXXXXXXX/Larochelle) of July, 1993, we indicated that we would confirm in writing the elements that should be included in a request for an advance income tax ruling in a structured settlement. The following guidelines apply:
1) the sum of $481.50 (Canadian Dollars) represents the Department's minimum fee which must be forwarded with your request.
2) a signed authorization by the taxpayer who is seeking the advanced ruling permitting you to request same on his/her behalf.
3) a copy of the Minutes of Settlement, Judgment, Assignment agreement form and/or Release.
4) the request should include:
a) A summary of the facts and content of the minutes of settlement and judgment or release.
b) A schedule setting out the annuity payments is to be forwarded. The amounts paid to the plaintiff must be in respect of damages and in settlement of personal injury claims.
c) The settlement must be made in the form of a promise by the casualty insurer to make regular periodic payments to the plaintiff for a fixed term or for the life of the plaintiff.
d) To be fully tax-free to the plaintiff, the annuity contract must be purchased and owned by the casualty company and it must be non-assignable, non-commutable and non-transferable. Although the casualty company must remain the beneficiary under the annuity contract, all payments under the contract must be irrevocably directed by the casualty company to be made to the plaintiff.
e) A confirmation must be made that the issues involved in the ruling request are, to the best of the taxpayer's knowledge and/or his/her representative's knowledge, not being considered by a District Office and/or Taxation Centre in connection with a tax return already filed, or subject to an objection or appeal. Further, no payments under the structured settlement must be made to the injured party until the ruling has been given.
Yours truly,
P.D. Fuoco for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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