Eyckelhoff – Tax Court of Canada recognizes that a taxpayer-funded disability policy can give rise to exempt receipts

The taxpayer, a Canadian resident, received periodic payments from a Netherlands insurance company (“Aegon”) which she submitted were exempt disability insurance payments, rather than pension payments (which Canada was entitled to include in her income under s. 56(1)(a)(i), consistently with Art. 18 of the Canada-Netherlands Treaty).

Wong J first stated that “where a person pays 100 percent of their disability insurance premiums, both the court and the Minister have treated the resulting benefits as not taxable [citing Béliveau],” but then went on to find that exemption on this basis had not been established by the taxpayer, given that there was insufficient evidence that the Aegon plan was a disability insurance plan or that the taxpayer had paid 100% of the premiums.

Neal Armstrong. Summary of Eyckelhoff v. The Queen, 2020 TCC 130 under s. 56(1)(a)(i).