25 February 2021 Internal T.I. 2020-0865641I7 - Settlement Payments to Registered Plans -- summary under Element D

After noting that it is CRA’s policy to consider that a settlement payment made to an RRSP or RRIF respecting an actionable loss suffered by it will not be treated as a contribution to the plan, nor as such a contribution or a taxable benefit to the annuitant if the damages are paid to the annuitant but are paid over to the plan by the later of the year end and six months after receipt, the Directorate confirmed that there also will be no adverse tax consequences where a settlement payment is made to a TFSA, or indirectly by the holder returning the payment to the plan within the timeframe applicable to the RRSP policy (it will not be treated as a contribution), and also will not be taxable if retained by the holder, as TFSA distributions are not taxable.