12 March 1999 External T.I. 9906165 - DAMAGES PAYMENTS

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:

Payments are made to claimants in respect of involuntary sterilization. The payments can be regarded as being in respect of personal injury. Are they taxable?

Position:. No

Reasons:

The Department’s general position in paragraphs 1 to 5 of IT-365R2 is that they are non-taxable.

Human Resources Development
Policy Interpretation Division
9th Floor, Tower “B”
Ottawa ON  K1A 0L1								990616
M. Eisner
Attention:  Bob Rees

March 12, 1999

Dear Sir:

Re: Compensation - Alberta Victims of Involuntary Sterilization

This is in reply to your facsimile of March 8, 1999 concerning whether payments made by the Alberta Government to victims of involuntary sterilization are required to be reported as income on their income tax returns. The concern arises because if these individuals are required to report the payments as income on their tax returns, this will impact, where the individual is a pensioner, on their applications in respect of the old age supplement.

XXXXXXXXXX

The Department’s general position on personal injury is set out in Interpretation Bulletin IT-365R2 “Damages, Settlement, and Similar Receipts”, which has been enclosed. As indicated in paragraph 2 of IT-365R2, the receipt of an amount in respect of general or special damages for personal injury is normally not considered to be taxable. In addition, as indicated in paragraphs 3 and 5 of IT-365R2, an award of damages in respect of personal injury that is payable to the claimant in periodic payments is not normally considered to be taxable in the circumstances described in paragraph 3 and 5 of IT-365R2. These non-taxable payments are not required to be reported on the claimants’ income tax returns.

We trust that our comments will be of assistance to you.

Yours truly,

Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate