| Correctional Service Canada | Your File No. 934-1 |
| 340 Laurier Ave. West | |
| Ottawa, Ontario | Our File No. 5-9257 |
| K1A 0P9 | A. Humenuk |
| (613) 957-2135 |
Attention: Richard Bergeron
February 8, 1990
Dear Sirs:
Re: Proposed Settlement for Lost Salary
We are responding to your letter of December 14, 1989, concerning a 24(1)
In our conversation of February 4, 1990, with Mr. Wladka of your Department, the following facts were presented:
24(1)
The determination of the nature of a payment such as that you describe for the purpose of the Income Tax Act (the Act) involves a finding of fact and as such we are reluctant to provide an opinion without an examination of all the facts and documentation relevant to such a determination. Nevertheless, we would like to offer the following general comments which may be pertinent to the situation before you. We caution you, however, that opinions about proposed transactions are not binding on the Department unless expressed by way of an advance income tax ruling as explained in the attached Information Circular 70-6R "Advance Income Tax Rulings". Please note that the current rate for rulings is $65 per hour and the minimum fee has been replaced with a $325 deposit.
An amount is included in income as employment income if the amount is received in respect of, in the course of, or by virtue of an office or employment. As we see it, an award which replaces income which ought to have been received by a taxpayer by virtue of employment retains its character as employment income notwithstanding the fact that the amount may also be described as damages. Under paragraph 53(2)(c) of the Canadian Human Rights Act (CHRA), an award can be made for any or all of the wages that a victim was deprived of as well as for any expenses incurred by the victim as a result of the discriminatory practice; under section 53(3) of CHRA, an award of up to $5000 can be made for punitive damages. It is our view that an award under paragraph 53(2)(c) of CHRA (or a settlement in lieu thereof) would likely be considered income from employment while an amount awarded under subsection 53(3) of CHRA (or a settlement in lieu thereof) would not. Consequently 24(1)
We trust our comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Affairs Branch
enclosure