2019-0827981E5 Federal Indian Day School Settlement

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Are the lump sum payments to the Survivor Class Members, pursuant to the Federal Indian Day School Settlement Agreement (Day School Settlement), required to be included in the income of the recipient for the purpose of the Income Tax Act (the “Act”)?

Position: The amounts to be paid are not included in income under the Act.

Reasons: The amounts are not income from a source.

Author: Brennan, Christopher

Section: 3, 12(1)(c), 56(1)(a.3), 56(1)(u), 81

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                                                                                              Chris Brennan, CPA CA

January 27, 2020


Re: Federal Indian Day School Settlement Payments

We are writing in response to your request regarding the income tax implications to the recipients of lump-sum payments from the Government of Canada under the Federal Indian Day School Settlement Agreement (the “Settlement”).

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R9, Advance Income Tax Rulings and Technical Interpretations.

Based on the information available, as to the nature of the lump sum payments to the Survivor Class Members (as defined in the Settlement), it is our understanding that the lump sum payments are intended to be compensation to Survivor Class Members who have suffered psychological, physical, and sexual abuse at Indian Day Schools. It is our view that amounts received by a taxpayer 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.

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

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