28 January 2000 Ministerial Letter 1999-0005088 - DISABILITY PENSION

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

January 28, 2000

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your letter of September 20, 1999, concerning the taxation of disability pensions.

The Income Tax Act contains specific provisions that require individuals to include in their income, amounts received out of a superannuation or pension plan, or benefits received out of the Canada or Quebec Pension Plan. Accordingly, a disability pension received out of a superannuation or pension plan, or the Canada or Quebec Pension Plan is subject to income tax at a rate that is dependent on the individual's level of income. Tax credits, including the disability tax credit, will effect the net amount of tax paid. Generally, individuals are entitled to a tax credit or deduction in respect to their contributions to the above plans. Furthermore, a contribution to the plans by an employer in respect of an individual will not, generally, result in a taxable benefit to the individual.

An individual who is an employee may also receive disability benefits under what is commonly referred to as a wage loss replacement plan. Where the entire premium cost of a wage loss replacement plan is paid by one or more employees, the premiums are not deductible and the benefits out of such a plan are not taxable. Where premiums to such a plan are made by the employer, the amounts received from the plan in respect of a disability are taxable in the hands of the employee. However, the employer's premiums to the plan are, generally, not a taxable benefit to the employees. I have enclosed a copy of Interpretation Bulletin IT-428, Wage Loss Replacement Plans, which provides details regarding the taxation of disability benefits received under a wage loss replacement plan.

I trust my comments are of assistance.

		Your sincerely,

		Martin Cauchon

Attachment

Jacques Grisé
957-2059
October 15, 1999

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