2015-0567751I7 annual and medical payments thalidomide survivor

Principal Issues: What are the income tax implications of annual payments and payments from an extraordinary medical assistance fund that will be paid by the Government of Canada via a contribution agreement with a third party administrator to each of the Canadian-born thalidomide survivors?

Position: They are not included in income and are not taxable.

Reasons: There is no link to a source of income.

Author: Shea-Farrow, Nancy
Section: -

XXXXXXXXXX
                                          2015-056775
                                          N. Shea-Farrow

September 25, 2015

Dear XXXXXXXXXX:

Re:  Payments to Eligible Thalidomide Survivors

We are writing in response to your request for confirmation of the income tax implications of proposed annual lifetime payments and payments from an extraordinary medical assistance fund (EMAF) to eligible thalidomide survivors (the “survivors”).  We understand that the payments are to be made by the Government of Canada via a contribution agreement with a third-party administrator. 

Based on the information we received from Health Canada as to the nature of the proposed payments from the EMAF and the annual lifetime payments to each of the survivors, it is our view that the payments will not be included in the income of the survivors and are not taxable under the Income Tax Act.

In addition, the one-time, lump-sum payment of $125,000 made in 2015 to each of the survivors would also not be included in the income of the survivors and is not taxable under the Income Tax Act.

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Manager - Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

c.c. Robert Greene, Legislative Policy Development

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