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.
Principal Issues: Are all relevant parties required to consent to an assignment arrangement.
Position: YES in those that are reffered to in IT-365R2.
Reasons: Paragraph 5 of IT-365R2
2003-002238
XXXXXXXXXX C. Tremblay, CMA
(613) 957-2139
April 5, 2004
Dear XXXXXXXXXX,
Re: Type 2 Structured Settlements
This is in reply to your letter of June 4, 2003, concerning amending current Assignment and Assumption Agreements for the use in the context of Type 2 structured settlements to remove the consent requirements.
The Canada Revenue Agency's (the "CRA") position regarding structured settlements is described in paragraph 5 of Interpretation Bulletin IT-365R2. Our position effectively requires that all relevant parties consent to the assignment and assumption arrangement as a requirement in order for the CRA to continue to regard the payments from the annuity received by the claimant as non-taxable. However, our published position only applies to those structured settlements dealing with personal injury or death in the manner described in paragraph 5 of IT-365R2 (a Type 1 Structure). As to whether that position would be applicable to other types of arrangements is a question of fact that would have to be reviewed in the context of an advance income tax ruling involving a structured settlement other than a Type 1.
We trust our comments are of assistance.
Steve Tevlin
For Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch
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, 2004
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, 2004
Email this Content