Principal Issues: [TaxInterpretations translation] Are amounts paid under the National Reconciliation Program with the Duplessis Orphans who attended certain institutions taxable?
Position: The amount of the allowance is not taxable.
Reasons: As stated in paragraph 2 of IT-365R2, amounts received as general damages for pain, suffering or loss of amenities of life are not taxable.
XXXXXXXXXX 2007-022680 François D. Bordeleau, LL.B. March 27, 2007
Dear Sir,
Subject: National program of reconciliation with the Duplessis orphans who attended certain institutions (the 'Program')
This is in response to your request of January 12, 2007, for our opinion on the Program.
More specifically, you wish to know whether the amounts paid under the Program are taxable for those who receive them and whether those amounts will have an impact on the Guaranteed Income Supplement ("GIS") that those persons receive, if applicable.
The Program provides for the payment of $26 million to orphans who did not receive assistance under the National Reconciliation Program with the Duplessis Orphans ("NRPDO"), which was in effect between September 2001 and May 2003.
In order to be eligible for the Program, a person must meet the following five conditions:
- Be an orphan or have been considered as such because the person was abandoned or born out of wedlock;
- Have been admitted to one of the designated institutions between January 1, 1935, and December 31, 1964;
- Have undergone a psychological assessment before or after being admitted to one of the designated institutions, which concluded that the person was intellectually handicapped or mentally retarded and were thus unsuitable for adoption or considered as such by the institution;
- Have received no financial assistance under the NPRDO;
- Have been alive on the date the Program came into effect (April 10, 2007) and applied for financial assistance to the Ministère de l'Emploi et de la Solidarité sociale no later than 120 days after that date. Each person eligible for the Program is to receive $15,000, paid as a lump sum. Persons accepting compensation under the Program must agree that the arrangement is final and exclude any legal recourse against anyone for any damage whatsoever relating to the events in question.
Our Opinion
As stated in paragraph 2 of Interpretation Bulletin IT-365R2, Damages, Settlements and Similar Receipts, all amounts received by a taxpayer or a dependant, as the case may be, that qualify as special or general damages for personal injury (for example, compensation for pain and suffering or for loss of amenities of life) will be excluded from income, regardless of the fact that the amount of such damages may have been determined with reference to the loss of earnings of the taxpayer in respect of whom the damages were awarded. Thus, we confirm that the amounts paid under the Program will not be taxable to those who receive them.
The Canada Revenue Agency is not responsible for the administration of the GIS program or the interpretation of the Old Age Security Act, R.S., 1985, c. O-9, under which the GIS is paid. As a result, we are unable to determine what impact, if any, the receipt of the allowance will have on the amount of GIS paid to those taxpayers. We therefore invite you to contact Ms. Suzanne Sicard, Senior Manager, Old Age Security Policy Directorate, Human Resources and Social Development Canada, at (613) 941-2776.
Best regards,
Louise J. Roy, CGA
Interim Manager
Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate
c.c. Suzanne Sicard
Social Development Canada
Old Age Security Policy
355 River Road North
Place Vanier, Tower B
18th Floor, Room 105
Ottawa ON K1A 0L1