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.
970074
XXXXXXXXXX M. Eisner
Attention: XXXXXXXXXX
February 6, 1997
Dear XXXXXXXXXX:
We are replying to your letter of January 2, 1997, wherein you request an advance income tax ruling with respect to a proposed structured settlement for damages arising out of personal injuries suffered by an individual.
As discussed with you, it is not possible to consider your advance income tax ruling request at this time as a draft of a proposed settlement agreement is not available for review. However, we are providing you with the following general comments.
You are concerned with the type of situation in which an individual (the Claimant) sustains personal injuries as a result of a motor vehicle accident in circumstances where the Claimant is entitled to damages from various defendants including the owner of the other vehicle. However, as the defendants are underinsured, the Claimant is entitled to recover damages from an insurer (the Insurer) as a result of an S.E.F. 44 Family Protection Endorsement (the Endorsement) which was included as part of an insurance policy issued by the Insurer. Where, as a result of the Endorsement, periodic payments are made by the Insurer to the Claimant in respect of his or her personal injuries and the arrangement is described in paragraph 5 of Interpretation Bulletin IT-365R2, it is our view that the periodic payments would not normally be taxable in the hands of the Claimant. Consistent with these comments, it is also our view that whether or not the Insurer is considered to be a "casualty insurer" for the purposes of paragraph 5 of IT-365R2 in relation to the periodic payments, is not normally considered to be a critical factor in determining whether the payments are exempt from income tax pursuant to that paragraph.
We would be pleased to consider a new request for an advance income tax ruling when a draft of the proposed settlement agreement is available.
We hope that our comments are of assistance but caution you that they do not constitute an advance income tax ruling, and, accordingly, are not binding on the Department with respect to any particular transaction.
The deposit which accompanied your request will be returned under separate cover.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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