Interest Received on Pay Equity Settlements

March 20, 2001 Some of our members may have received pay equity settlements during the course of the 1999 - 2000 taxation year. The principal amount received by these individuals is considered to be income, and is therefore taxable. However, the interest on the pay equity settlements may be considered an arbitral award, and therefore not subject to personal income tax. You may appeal the taxation of this amount by proceeding as follows:
As a recipient of a pay equity settlement, you would have included the related T-5 form in your 1999 - 2000 income tax return. (If you have failed to do so, you may be subject to penalties by the Canada Customs and Revenue Agency.)
Upon receipt of your Notice of Assessment, you may consider completing an Objection Form #T400A (CCRA Website) , indicating that you object to the calculated taxation applied to the interest paid to you by your employer on the pay equity settlement.
If you decide to file this objection, send it to the Canada Customs and Revenue Agency at:
2251 René-Lévesque
Jonquière, Quebec
G7S 5J2
Please note that objections must be filed within 90 days of the date the Notice of Assessment was mailed to you.
SSEA makes no guarantees and/or representations as to whether any such objection will be allowed. Given that this involves a possible interpretation of the Income Tax Act, you may wish to obtain advice from a tax lawyer, accountant or financial advisor before undertaking these actions.
We ask that you share this information with any individuals you might know who would have been in receipt of an interest cheque as a result of the pay equity settlement.