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.
Re: Assignment of Liability-Structured Settlements
This is in reply to your letter of January 4, 1991 requesting a technical interpretation in connection with the assignment of liability in relation to a structured settlement for damages arising from a personal injury or death claim by an individual. You provide a hypothetical fact situation as the basis for your requested technical interpretation and presumably as a model for future advance income tax ruling requests. Included with your request was a copy of a Minutes of Settlement, a Judgment and a Conditional Assignment Agreement relating to your hypothetical fact situation.
The example that you set out is quite specific and it appears that it may relate to a particular contemplated transaction or transactions. Assurance as to the tax consequences of contemplated transactions can only be given in response to a request for an advance income tax ruling. The procedure for requesting an advance income tax ruling is outlined in Information Circular 70-6R2. If you wish to obtain any binding commitment with respect to actual cases with facts similar to your example, an advance income tax ruling application should be submitted. Although we are unable to provide any binding assurance here with respect to the queries you have raised, we do provide the following general comments for your information.
Our Comments
The Department has recently issued a favourable advance income tax ruling concerning a structured settlement that involved the assignment of a settlement agreement to an appropriate assignee in circumstances similar to those outlined in your hypothetical example. We not that one substantial difference between the ruling and your hypothetical example is the fact that the assignee in the ruling was a separate entity from the insurance company which issued the annuity. The consequences of an assignment to the issuer of the annuity would have to be carefully considered in the context of an actual fact situation. Apart from this consideration, we are reasonably confident at this time that, should a ruling request be received in the near future in which the assignment of the settlement agreement to an appropriate assignee was an integral part and it otherwise complied with the provisions of paragraph 5 of Interpretation Bulletin IT-365R2, it would receive a favourable response.
We trust our comments will be of assistance.
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, 1991
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, 1991
Email this Content