An individual receives a lump-sum amount receivable from a former employer under a written agreement made following the termination of employment covenant, outlining (among other things) what could, and could not be done for a specified period thereafter. The lump-sum amount was calculated with reference to the former’s employee’s loss incurred on the disposition of an investment in [the employer?] CRA stated:
While amounts of this nature (e.g., non-competition payments) are generally deemed by paragraph 6(3)(b)… to be employment income…an amount received pursuant to a contractual obligation with a former employer may be treated as a retiring allowance in circumstances where the amount received can also reasonably be regarded as compensation for a loss of employment.
Thus, where it is established that your XXXXXXXXXX were only sold because of your termination of employment (i.e., you would not have sold your XXXXXXXXXX otherwise), the amount receivable (equal to your loss on the disposition of XXXXXXXXXX) under the non-competition agreement could be reasonably regarded as compensation for your loss of employment. In such a case, the amount when received would be included in income as a retiring allowance under subparagraph 56(1)(a)(ii)... .