Section 107.1

Paragraph 107.1(a)

See Also

Scott v. The Queen, 2017 TCC 224, 2017 TCC 224

s. 107.1(a) in effect produced a rollover on cash distribution of mooted benefits

In 1980, Nortel had established a health and welfare trust (the “HWT”) for its employees. Following its insolvency and filing under the CCAA (with the related CCAA proceedings being court-supervised), it made lump sum payments in 2011 to the four taxpayers, pursuant to a court-approved settlement agreement, in satisfaction of their entitlement to payments under the HWT. Before going on to address whether these distributions were taxable to the taxpayers under s. 6 or 56, Sommerfeldt J stated (at para 66):

Counsel for the Appellants acknowledged that the rollover provisions in section 107.1 of the ITA do apply to the HWT, as it is a trust described in paragraph (a.1) of the definition “trust” in subsection 108(1) of the ITA. The effect of paragraphs 107.1(a) and (c) of the ITA, which are the applicable provisions, is that neither the HWT nor the Appellants realized a gain or a loss on, respectively, the disposition of property by the HWT when making the distributions or the disposition by the Appellants of parts of their respective interests in the HWT in exchange for the distributions.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 89 - Subsection 89(1) - Paragraph 89(1)(a) trust return not admitted at trial opening where no previous notice and not relied upon by CRA 211
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) a distribution from a health and welfare trust to compensate for lost insurance coverage was not a taxable benefit as it did not come within s. 6(4) 304
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(iii) payment made as compensation for termination of monthly death benefits was paid, at the least, in lieu of a death benefit 221
Tax Topics - General Concepts - Stare Decisis Supreme Court obiter accorded deference 129
Tax Topics - Income Tax Act - Section 9 - Compensation Payments surrogatum principle references "why the compensatory amount was paid," and not confined to business receipts 191
Tax Topics - Statutory Interpretation - Specific v. General Provisions termination payment that did not come within s. 6(4) should be treated as excluded from s. 6(1)(a) 141