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.
Principal Issues:
An individual wants us to allow revision of a structured settlement by commuting the annuity providing the lump sum payments.
Position TAKEN:
We are unable to be of assistance.
Reasons FOR POSITION TAKEN:
One of the requirements of a structured settlement is that the related annuity contracts be non-commutable. This agrees with prior opinions.
XXXXXXXXXX 5-991058
D. Miller
May 19, 1999
Dear XXXXXXXXXX:
Re: Structured Settlements
This is in reply to your letter of April 15, 1999, regarding the above subject.
You have indicated that as a result of an accident in 1990, you have been receiving periodic payments under a structured settlement arrangement, which is generally described in paragraph 5 of Interpretation Bulletin IT-365R2 “Damages, Settlements and Similar Receipts”. You have submitted some of the documents in this regard.
As a result of your financial circumstances, you have asked us whether the remaining payments under one of the annuity contracts, issued in connection with the structured settlement, could be commuted by the owner (insurer) and the related lump sum amount paid to you.
Payments made to the claimant under a structured settlement arrangement are in the nature of non-taxable damages. However, for payments to be treated in this manner, one of the requirements is that the related annuity contracts be non-commutable. As a consequence of this requirement, we are unable to be of assistance with respect to your request that the owner of one of the two annuity contracts be permitted to commute the remaining annuity payments and pay the proceeds to you.
If you have any further questions on this issue, please do not hesitate to contact Mr. Don Miller at (613) 957-2060.
We regret that we could not give you a favourable reply.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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