Your employer may pay wage loss replacement contributions to an insurer to offer you, as an employee, an income maintenance insurance plan.
If this plan is offered to you by your employer, and you participate in one or several of the plan types, you will receive payments from the plan if you lose a part or all of your employment income due to a health insurance, accident insurance, disability insurance, or income insurance claim.
If the premiums are paid for by both you and your employer, the following rules apply:
- The premiums you pay can be deducted from any benefits that you receive from the plan.
- You have to keep track of the premiums you pay until the time that you collect from the plan.
- Premiums you have paid for the year can be found on your final pay stub for the year, under LTD or STD premiums.
If you pay all the premiums, the benefit amount you receive when you collect from the plan is not taxable.
The Canada Revenue Agency (CRA) says…
Employers may offer various types of insurance plans to employees. The tax treatment of employer-paid premiums or contributions to these plans may differ depending on the nature of the plan, the type of benefits offered, and whether the plan is offered to individual employees (a non-group plan) or a group of employees (a group plan).
Revenu Québec says…
As a rule, wage loss replacement benefits are benefits paid in the following circumstances:
- They are paid by an insurer to a beneficiary, under a wage loss replacement plan (health insurance, accident insurance, disability insurance or income insurance), to compensate for the loss of all or part of a beneficiary's employment income.
- The beneficiary's employer contributed to the insurance plan.
Wage loss replacement benefits are subject to source deductions of income tax.
Where can I learn more?
- Income maintenance plans and other insurance plans (CRA website)
- Line 104 – other employment income (CRA website)
- Wage loss replacement benefits (Revenu Québec website)
- Box O – Benefits paid under a wage loss replacement plan (Revenu Québec website)