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.
963708
XXXXXXXXXX M. Eisner
Attention: XXXXXXXXXX
December 20, 1996
Dear Sirs:
Re: Damages - XXXXXXXXXX
This is in reply to your letter of October 2, 1996 in which you asked about a structured settlement described in paragraph 5 of Interpretation Bulletin IT-365R2 in respect of the above person (the Individual). We also acknowledge our telephone conversation on November 29, 1996.
In the circumstances of your situation, the Individual was advised by his employer in the spring of 1986 that his employment would be terminated. Subsequent to the termination date, the employer made payments to him in respect of 11 months salary. Unfortunately, the Individual suffered a stroke on December 6, 1986. Subsequently, the Individual filed a claim against his employer which related to wrongful dismissal.
A mediator has recently considered the claim and awarded the Individual amounts in respect of care expenses and disability benefits that relate to amounts which he would have been entitled to if he had not been wrongfully dismissed.
While the individual has sustained personal injury as a result of the stroke, it is our view that the amounts awarded in respect of care and disability benefits will be a "retiring allowance" by virtue of paragraph (b) of the definition of this term in subsection 248(1) of the Income Tax Act. Accordingly, the comments in respect of damages for personal injury or death in paragraph 5 of IT-365R2, are not applicable. However, please refer to paragraphs 14 and 15 of IT-365R2 that discuss the tax consequences related to a "retiring allowance."
We trust our comments will be of assistance to you.
Yours truly,
John F. Oulton
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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