Counsel will no doubt consider issues such as the most effective tax allocation of damage sums to allow for the most effective settlement terms. All eyes will be on the IT bulletin referenced below in detail, past cases to determine a fair allocation of damage components and the obligation to repay E.I. benefits when required. Also, consideration should be given to the right of the taxing authority to gain access to settlement details and discussions, as is also reviewed.

These are very important issues as setting out the taxable and non-taxable damage components in the minutes of settlement must be carefully crafted. Often the settlement agreement will contain specific terms setting out the obligation to withhold tax, or not, on the terms outlined.

The remedy available to the innocent party when the minutes are violated, in the case of a breach of confidentiality, is also discussed.