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.
July 30, 1996
Business Returns Processing Rulings Directorate
Division Michel Lambert
Mr. R. Ouimet 957-8953
Director
7-962587
An Act Respecting Industrial Accidents and Occupational Diseases
Worker's Compensation - Form T5007
This is in reply to your memorandum dated July 18, 1996, in which you requested further clarification on the taxation of amounts received by a taxpayer under the rehabilitation program of the Commission de la santé et de la sécurité du travail du Québec (CSST).
FACTS
The CSST is currently reviewing their complete financial assistance program with a view to ensuring that form T5007 will be issued correctly.
When the CSST determines that a beneficiary can no longer return to his former employment, they will either (A) award a pension for life or (B) award a one time lump sum payment to the beneficiary if he or she wants to start up a business. If option (B) is chosen, the CSST continues the pension, gives a lump sum payment to start the business and provides 5 annual declining payments to help during the start-up period. The 5 annual declining payments are based on the difference between a prescribed amount in the CSST's Act and the profits they expect the beneficiary should be earning from the business in a specific year.
YOUR OPINION
You are of the opinion that the five declining payments represent wage replacement and therefore, T5007 slips should be issued.
For ease of reference, we reproduce the following paragraph from your memorandum:
Cependant, lorsque le travailleur peut démontrer, par une preuve prépondérante, qu'en raison de circonstances imprévues, le revenu qu'il retire réellement de son entreprise est inférieur à celui évalué lors de l'étude de rentabilité, la Commission révise alors son indemnité de remplacement du revenu en utilisant ce revenu tel que démontré par le travailleur.
We understand that the five declining payments are paid under section 178 of the CSST's Act and therefore, we are of the opinion that the amounts are brought into income under paragraph 56(1)(v) of the Income Tax Act and exempted from tax under 110(1)(f)(ii) since they are paid by a Worker's Compensation Board. We also agree with you that T5007 slips should be issued.
If you have further questions or concerns, please contact the writer.
Michel Lambert
for the Director
Resources Industries, Partnerships
and Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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