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.
R.B. Day 957-2136
Nov 25 1988
Dear Sirs:
Re: RCMP Long Term Disability Insurance Plan
We are writing in reply to your letter of October 19, 1988, wherein you requested our comments with respect to the income tax implications of the suggested changes to your Long Term Disability (LTD) plan.
As we understand it, the Federal Government as employer of members of the RCMP, pays one-half of the required premiums and members of the Force, as employee participants, pay the other one-half. This makes the financial benefit that a disabled ex-member receives a taxable benefit.
XXXX
Assuming that the existing LTD plan would, in fact, be split into two distinct and separate plans and provided there is no cross-subsidization between the two plans and the level of benefits, premium rates, qualifications for membership and other terms and conditions of each of the plans are not dependent upon the existence of the other plan, it would appear that the benefits received by members of the Force under LTD1 would be included in income under paragraph 6(1)(f) of the Income Tax Act and the benefits received under LTD2 would be non-taxable by virtue of the plan being an "employee pay-all" plan.
We are enclosing, for your information a copy of Interpretation Bulletin IT-428 entitled "Wage Loss Replacement Plans". We wish to draw you [sic] attention to the commentary on pages 5 and 6 under the heeding "Employee Pay-All Plans".
The above comments are based on the limited information set out in your letter and as such are not binding on the Department.
Should you require additional information or explanations, please contact the writer.
Yours truly,
ORIGINAL SIGNED BY P.D. Fuoco for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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© His Majesty the King in Right of Canada, 1988
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© Sa Majesté le Roi du Chef du Canada, 1988
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