| 24(1) | File No. 900565 |
| W.C. Bailey | |
| 957-2061 | |
| 19(1) |
May 24, 1990
Dear Sirs or Madam:
Re: Timing of Deductibility of Damage Award
This will reply to your letter of April 26, 1990.
Your concern, assuming deductibility in the first instance, is the timing of the deduction of a damage liability award handed down by a court perhaps years after the accident or event causing the damage.
It is the Department's view, quoting from IT-467, that "an allowable deduction in respect of damages can only be claimed by a taxpayer when paid or where there is a legal or contractual liability to pay such damages and the amount thereof has been quantified". We take this to mean that the deduction will be for the taxation year in which the award is paid or becomes payable.
This view appears to corroborate your own view in the matter.
Yours sincerely,
for DirectorBusiness and general DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch