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.
Principal Issues: Whether employer-paid premiums to a critical illness insurance plan is a taxable employee benefit.
Position: Likely yes. However, until we have the opportunity to examine a detailed submission, along with all related agreements for these types of plans, we will not be able to comment definitively on the income tax consequences.
Reasons: Employees are generally taxable on the value of all benefits they receive by virtue of their employment, unless the Income Tax Act specifically provides otherwise.
XXXXXXXXXX J. Gibbons
1999-001360
Attention: XXXXXXXXXX
January 28, 2000
Dear XXXXXXXXXX:
We are replying to your letter of November 26, 1999, in which you requested our views about the income tax treatment of employer-provided "critical illness insurance." As you explained it, the critical illness insurance will pay you the face value of the policy ($XXXXXXXXXX) 30 days after you are diagnosed with an eligible life-threatening illness, i.e., cancer, heart attack, stroke, etc.
As requested, we have considered your situation and have provided some comments below. However, we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. Thus, our comments are of a general nature only.
Employees are generally taxable on the value of all benefits they receive by virtue of their employment, unless the Income Tax Act specifically provides otherwise. Accordingly, the amount you were reimbursed by your employer for the premiums paid for critical illness insurance is a taxable employment benefit that has to be included as a benefit on your T4 slip. Any benefits received by you from the plan will be non-taxable.
At the 1999 CALU (the Conference for Advanced Life Underwriting) held in May, we addressed the issue of critical illness insurance plans in Question 5. We indicated that, as far as we knew, the Agency had not yet conducted a thorough review of what the insurance industry refers to as "critical illness insurance," under either a group or non-group arrangement. Since this is still the case, we are still unable to confirm the income tax consequences if an employer purchased this type of an insurance plan. Until we have the opportunity to examine a detailed submission, along with all related agreements for these types of plans, we will not be able to comment on the income tax consequences.
We trust that these comments will be of assistance.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2000
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2000