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: Tax treatment of premiums paid by an employer on group life insurance and group dependent life insurance.
Position: Premiums paid by an employer on "group term life insurance policy" are excluded from an employee's income .
A policy that covers both employees and dependents or dependents only would not be considered a "group term life insurance policy" Therefore, employer's premium payments on such a policy would be included in an employee's income.
Reasons: Subparagraph 6(1)(a)(i); Subsection 248(1); Subsection 6(4) and Part XXVII of the Regulation.
XXXXXXXXXX 2000-000107
Wm. P. Guglich
March 8, 2000
Dear XXXXXXXXXX:
Re: Group Term Life Insurance Policy
This is in reply to your request of January 6, 2000, requesting our views as to the tax treatment of premiums paid by an employer on group life insurance and group dependent life insurance. You indicated that it was your understanding that such premiums were taxable employment benefits when paid by an employer. You requested that we provide you with references or other sources of information to support this conclusion.
Subparagraph 6(1)(a)(i) of the Act (the "Act") specifically excludes from an employee's income the value of benefits derived from an employer's contributions to specific employer-sponsored arrangements. Included are employer's contributions to a "group term life insurance policy," which is defined in subsection 248(1) of the Act. However, subsection 6(4) requires a taxpayer whose life is insured under a group term life insurance policy, to include in income for the year from an office or employment the amount if any, prescribed for the year in respect of the insurance policy. Part XXVII of the Income Tax Regulations contains the rules for calculating the prescribed amount for the year. For a discussion on this topic, please refer to the comments in paragraph 20 of Interpretation Bulletin, IT-529, Flexible Employee Benefit Programs.
If a single policy covers both employees and their dependents, it will not be considered a group term life insurance policy for purposes of the Act. Accordingly, the benefit derived from an employer's contributions for such coverage is required to be included in income under paragraph 6(1)(a) of the Act, as such contributions do not fall into any of the excluded items in subparagraph 6(1)(a)(i) of the Act. Similarly, a policy which covers dependents only would also not be considered a group term life insurance policy.
We trust our comments will be of assistance.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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