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: Interest on workers' compensation payment.
Position: Exempt from income.
Reasons: Consistent with previous position on similar issue.
July 30, 1998
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your letter of March 19, 1998, addressed toXXXXXXXXXX, concerning the reinstatement of workers’ compensation benefits to widows of British Columbia workers and the taxation of the interest portion of these payments. XXXXXXXXXX sent Mr. Dhaliwal a copy of your letter on April 20, 1998.
As noted in the attachments to your letter, the Department has reviewed the taxation of the interest payable by the Workers’ Compensation Board as a result of the 1996 decision by the Supreme Court of British Columbia in the case of Marlene Grigg versus British Columbia. In that case the court ordered the Workers’ Compensation Board to provide Ms. Grigg with the same retroactive benefits and interest as was provided to others as a result of a change to the Workers’ Compensation Act.
Compensation received under an employees’ or workers’ compensation law of a province in respect of an injury, a disability or death of an individual is included in income, but an offsetting deduction is available so that such compensation is not subject to tax. The Department’s position has been that pre-judgement interest on certain retroactive workers’ compensation payments does not have to be included in calculating income, however, it was concluded that this position did not apply to amounts received in situations similar to Ms. Grigg’s.
Based on your input and the comments received from others, departmental officials re-examined the issue of taxation of interest paid to all widows of British Columbia workers on retroactive benefits from the Workers’ Compensation Board of British Columbia. I am pleased to advise you that the Department has now concluded that these interest amounts are to be treated the same as the aforementioned pre-judgement interest and considered exempt from taxation. Consequently, the interest portion of these payments will not have to be included in calculating the recipient’s income.
I trust you will find my comments helpful.
Yours sincerely,
Bill McCloskey,
Assistant Deputy Minister
Policy and Legislation Branch
David Duff
July 13, 1998
957-2058
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