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: We have been asked about our position on the meaning of “post-judgment” interest in relation to a personal damages settlement by a person who lives in Australia. On the basis of the information in the letter, there are no Canadian tax consequences.
Position: Some general comments were provided.
Reasons: See principal issues
XXXXXXXXXX 982266
M. Eisner
October 15, 1998
Dear Sir:
Re: Post-judgment Interest on Damages in respect of Personal Injury or Death
This is in reply to your letter of July 16, 1998, concerning the above subject.
You have indicated that your wife, a non-resident of Canada, was awarded an amount in 1984 by an Australian court as a result of a personal injury that she sustained. However, the matter was not finally resolved until 1992 when the Australian High Court rendered its decision. Subsequent to that court decision, it was determined that your wife was taxable on post-judgment interest. While it is our understanding that your circumstances have no Canadian income tax implications, you have asked about the Canadian tax treatment of post-judgement interest and the definition of this term, particularly as it relates to the fact situation described above.
Where an amount in respect of damages for personal injury includes or is augmented by pre-judgment interest, it is our general position that such interest is not income to the recipient. On the other hand, post-judgment interest is generally taxable and must be included in income.
The term “post-judgment interest” is not defined in the Income Tax Act and, therefore, its ordinary common law meaning would apply. We have not been provided with the necessary information to make a determination of the date post-judgment interest would be considered to arise, nor would it be appropriate for us to do so in light of the fact the issue is under dispute between you and the Australian tax authorities. Our Department does not have any set guidelines with respect to the issue you have raised.
We trust that these comments will be of assistance to you.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
- 2 -
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1998
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1998
Email this Content