Principal Issues: Whether payments received by the individual Class Members, under the Yeo v. Ontario settlement agreement, would be included in the income of the recipients.
Position: The amounts to be paid are not included in income under the Act.
Reasons: The amounts are not income from a source.
XXXXXXXXXX
2021-092024 Chris Brennan, CPA, CA
January 10, 2022
Dear XXXXXXXXXX:
Re: Class Action Settlement Funds
This is in reply to your email of December 2, 2021, where you requested our views on the income tax implications to the individual recipients of settlement amounts received under the settlement agreement of the class action Yeo v. Her Majesty the Queen in Right of the Province of Ontario (Yeo v. Ontario).
In addition to the information you provided, we obtained from the webpage cpriclassaction.ca/documents the following documents for Yeo v. Ontario,:
- Decision – Settlement Approval – July 21, 2021 (Settlement Decision), and;
- Settlement Agreement – Executed (Settlement Agreement).
Based on the information within the Settlement Agreement and the Settlement Decision, as to the nature of the payments to the individual Class Members (as defined in the Settlement Agreement), it is our understanding that the payments are intended to compensate individual Class Members who have suffered physical, and sexual abuse as former inpatients of the Children's Psychiatric Research Institute. It is our view that amounts received by a Class Member, under the Settlement Agreement, as damages for personal injury will not be income from a source, and as such, will not be included in income and will not be taxable under the Income Tax Act (Act).
Your email states that the Ministry of Children, Community and Social Services (MCCSS) is requesting your confirmation that federal income-tested benefits will not be affected by payments received by the individual Class Members. You specifically mention the Old Age Security benefits (OAS) and the Guaranteed Income Supplement (GIS).
Since the amounts received by the Class Members, under the Settlement Agreement, will not be included in income, they will not impact the Class Members’ federal income-tested benefits, such as the Old Age Security benefits (OAS) and the Guaranteed Income Supplement (GIS).
I trust the information provided is helpful.
Yours truly,
Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch