| 19(1) | File No. 5-0194 |
| A. Humenuk | |
| (613) 957-2135 |
June 21, 1990
Dear Sir:
Re: Awards by the Canadian Human Rights Commission
We are responding to your request of February 8, 1990 as to whether the payment of an award under the Canadian Human Rights Act (CHRA) in the case of a particular complainant would be required to be included in income for tax purposes.
As indicated to you by telephone, we cannot comment on the case described in the documents you forwarded to us on the above date without the written authorization of the complainant. However, we can offer the following general comments concerning these types of payments.
The determination of the tax status of payments pursuant to the CHRA involves a finding of fact and can only be made after an examination of all the relevant facts and documentation including the actual settlement agreement.
We would like to point out, however, that the CHRA makes a distinction between payments made for any or all of the wages that a complainant has been deprived of which can be awarded under paragraph 53(2)(c) of that Act, and an award under subsection 53(3) of that Act of up to $5,000 for suffering by the complainant in respect of feelings or self-respect. In our view, while an award under subsection 53(3) for suffering may be excluded from income, awards under paragraph 53(2)(c) of the CHRA (or a settlement in lieu thereof) would normally be considered employment income.
All amounts received in respect of, in the course of, or by virtue of an office or employment are taxable as employment income under the Income Tax Act. Any award which replaces an amount of employment income that should have been received by a complainant by virtue of his or her employment retains its nature as employment income notwithstanding that it may also be described as damages. If the complainant is not entitled to be reinstated, an award in respect of a loss of an office or employment may qualify as a retiring allowance rather than employment income. We enclose a copy of Interpretation Bulletin IT-337R2 entitled "Retiring Allowances" which discusses the circumstances under which a payment received by a former employee is considered to be a retiring allowance.
In our conversation of February 9, 1990, you asked whether the reference to the kidnapping of an employee in paragraph 12 of Interpretation Bulletin IT-365R2 would be analogous to this situation. In our view, these comments address a unique situation that would not be applicable in this case.
We trust our comments will be of assistance to you.
Yours truly,
R.D. Weil for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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