Principal Issues: 1.) Tax implications to an employee of benefits received under a wage loss replacement plan that is co-paid by an employer.
2.) Whether any part of an employee's contribution or benefit can be deducted where such a benefit is taxable, and if so, on what line of the individual's tax return may such a deduction be claimed.
3.) Whether the employer or insurer is responsible for providing contribution documentation used to determine available deductions to employees.
Position: 1.) Subparagraph 6(1)(a)(i) of the Act excludes from an employee's income the value of benefits derived from the contributions of an employer to a wage loss replacement plan. However, paragraph 6(1)(f) includes in employment income any benefits paid to an employee from a plan where the employer pays all or part of the premiums for the plan.
2.) The amount of the benefit included in income is reduced by the amount of contributions made by the employee provided for by subparagraph 6(1)(f)(v). The amount of taxable benefits received under a wage loss replacement plan that may be offset by employee contributions to the plan is not a deduction, but a reduction to the total amount of taxable benefits received. The responsibility for determining and substantiating the employee contributions that can be offset against the benefits rests with the taxpayer making the claim and reporting the amount on line 104 of the individual's tax return.
3.) The responsibility of providing documentation related to the contributions to or benefits received by the employee under such a plan can only be established though review of the terms of the contract between the employer and insurer for the provision of benefits and the plan documents, and is a question of fact.
