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.
Principal Issues:
Request us to confirm that a structured settlement under Bill 164 Ontario Automobile Insurance is acceptable (no fault insurance)
Position TAKEN:
Provided the requirements os the Insurance Act of Ontario and relevant regulations are complied with and the periodic payments are in respect to damages for personal injury. Further if the requirements in paragraph 5 of IT-365R2 are met then such settlement will be considered a structured settlement.
Reasons FOR POSITION TAKEN:
Favourable position if conditions mentioned abive are met
XXXXXXXXXX 940504
Attention: XXXXXXXXXX
May 20, 1994
Dear XXXXXXXXXX
Re: Structured Settlements under Bill 164 - Ontario Automobile Insurance
This is in reply to your letter of February 25, 19942, and subsequent correspondence with enclosures concerning the above noted subject.
It is our understanding that, under the Insurance Act of Ontario, as amended by Bill 164, (the "Insurance Act") an individual who sustains personal injuries as a result of an automobile accident is automatically entitled, from the insurer, to the benefits prescribed by regulation in the Statutory Accident Benefits Schedule - Accidents on or after January 1, 1994 (the "SABS"). If the individual is seriously injured, that individual has the right to sue an at-fault driver for compensation for pain and suffering. There is nothing in the relevant legislation which would prevent an injured individual from settling a claim with the insurer other than in accordance with the benefits provided under the SABS provided that such settlement complies with the provisions of Ontario Regulation 780 made under the Insurance Act. The injured individual may settle for a lump sum or periodic payments under a structured settlement. You have asked us to confirm that periodic payments under such a settlement agreed to in accordance with this new Ontario legislation will be considered a structured settlement as described in paragraph 5 of Interpretation Bulletin IT-365R2.
Based on the information submitted and our review of the relevant legislation, it is our view that, provided that all of the requirements of the Insurance Act of Ontario and relevant regulations are complied with, periodic payments made in settlement of damages for personal injuries sustained in an automobile accident will be considered as non-taxable damages. Such a settlement will be considered a structured settlement as contemplated in Interpretation Bulletin IT-365R2 if the requirements in paragraph 5 of that bulletin are otherwise met.
We trust this will be of assistance to you.
Yours truly,
P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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