It will depend on what the settlement is for. Per CRA:
"(a) if the compensation is received for the failure to receive a sum of
money that would have been an income item if it had been received, the
compensation will likely be an income receipt"
Leanne provided a very helpful link for these situations, if you scroll down to "damages, settlements and similar receipts"
http://www.cra-arc.gc.ca/E/pub/tp/it365r2/it365r2-e.html
