Why should Employees pay Disability Benefit premiums?


Group long-term disability (LTD) plans can be non-taxable (employee-paid premiums resulting in non-taxable claim payments) or taxable (employer-paid premiums resulting in taxable claim payments). Canada Revenue Agency’s Interpretation Bulletin IT-428 makes it clear that employees must pay 100% of LTD premiums if claim payments are to be non-taxable. This is a common strategy for employers to have employees pay all of the LTD premiums, with the rationale that at least the payments will be non-taxable if employees ever need to claim LTD.

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