Principal Issues: Can a structured settlement be amended to allow for greater monthly payments by using the final lump-sum payment?
Position: NO
Reasons: Structured settlement annuity contracts are non-commutable.
2004-010165 XXXXXXXXXX C. Tremblay, CMA (613) 957-2139 December 7, 2004
Dear XXXXXXXXXX,
This is in reply to your letter of September 27, 2004, regarding a structured settlement you started receiving in XXXXXXXXXX that provides for guaranteed monthly periodic payments of $XXXXXXXXXX and a lump sum final payment on XXXXXXXXXX of $XXXXXXXXXX. As a result of your financial circumstances, you have asked us whether the annuity contract, issued in connection with the structured settlement, can be amended to allow the issuer (XXXXXXXXXX ) to increase the monthly payments by spreading the lump sum final payment over the existing term. We understand that the owner (XXXXXXXXXX) will not allow for this amendment because the contract is non-commutable.
The Canada Revenue Agency (the "CRA") cannot amend a negotiated contract to which the CRA was not a party. As a consequence, we are unable to be of assistance.
We regret that we could not give you a favourable reply.
Yours truly,
Steve Tevlin
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch