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.
Subject: Minister's Correspondence YS 91-3118T XXX
This is in reply to your memorandum of May 21, 1991 wherein you requested our views as to the taxability of an amount received by the above-noted taxpayer as an award of damages.
The facts of the situation as contained in the taxpayer's letter to his Member of Parliament XXX are summarized as follows:
Source Deductions Division is of the view that the amount in question cannot be considered as either a retiring allowance or employment income since actual employment activity had not commenced. You have asked for our opinion on the matter.
In considering our views on the matter we have made the assumption, based on the description of events contained in the Statement of Claim included in the attachments to your memorandum XXX. As a result, the subsequent "withdrawal of the employment offer" was in fact a termination of the employment contract. It is our view, therefore, that the cash settlement was paid in respect of the loss of employment and as such should be characterized as a retiring allowance, as that term is defined in subsection 248(1) of the Act.
The cases that were the subject of the two legal opinions referred to in your memorandum are distinguishable from the factual situation set out above. In each of those cases the recipient of the award had not been under an employment contract at the time of the incident that led to the award of damages. The cases involved allegations of a contravention of applicable Human Rights legislation.
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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