Do not negotiate a lump sum settlement and then ask that it be converted into the annuity. If the Canada Customs and Revenue Agency (CCRA) discovers that a lump sum settlement was reached and then converted all or in part to a structure, the tax department may disallow the tax-free status of the structure resulting in a tax liability to the client.
Do not allow the plaintiff or your law firm to receive the annuity premium. The annuity must be purchased directly by the casualty insurer or its counsel. The tax-free status of a structure can be nullified if the purchase price of the annuity is paid to the plaintiff or his/her lawyer.
