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Thread: Accountant/Personal Tax question - Disability income.

  1. #1
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    Default Accountant/Personal Tax question - Disability income.

    Can anyone recommened a accountant or a tax savvy person? Or help answering the following question.
    I was in a car accident and have been off work(im going back full time next week so yay!). So for 2021 I received STD and LTD payments from my employer. I have T4A for these. That is all good.
    BUT....my car insurance company paid out some money as I was missing income. How do I report this on my taxes?
    I asked my insurance rep if I get a T4A. They said its a disability benefit and is tax free. So how do I report this on my taxes?
    Do I put this in Line 11900?


    https://www.canada.ca/en/revenue-age...hat-taxed.html

    amounts that are exempt from tax under section 87 of the Indian Act (Section 87 tax exemption)
    most lottery winnings
    most gifts and inheritances
    amounts paid by Canada or an allied country (if the amount is not taxable in that country) for disability or death of a war veteran due to war service
    GST/HST credit and Canada child benefit (CCB) payments, including those from related provincial and territorial programs
    Family allowance payments and the supplement for handicapped children paid by the province of Quebec
    Compensation received from a province or territory if you were a victim of a criminal act or a motor vehicle accident
    Most amounts received from a life insurance policy following someone's death
    Most types of strike pay you received from your union, even if you perform picketing duties as a requirement of membership

    Or do I not report it as it is not taxable..?
    https://www.taxtips.ca/personaltax/e...f-employed.htm

    Disability insurance costs are not tax deductible for employees. Even so, if your employer doesn't have a short or long term disability plan, it is wise to purchase one yourself, especially if you have debt or dependants.

    In any case, make sure you buy disability insurance, so that you will be covered in the case of medical emergencies which result in you being unable to work and earn income.

    Excerpts from IT-428 Wage Loss Replacement Plans:

    14. For benefits received by an employee under a wage loss replacement plan to be subject to tax in his hands under paragraph 6(1)(f), the plan must be one to which the employer has made a contribution out of his own funds. An employer does not make such a contribution to a plan if he merely deducts an amount from an employee's gross salary or wages and remits the amount on the employee's behalf to an insurer. In these circumstances, the employee's remuneration for tax purposes is not reduced by the amount withheld and remitted by the employer to the insurer.

    17. It is a question of fact whether or not an employee-pay-all plan exists. An employer cannot change the tax status of a plan by adding at year end to employees' income the employer contributions to a wage loss replacement plan that would normally be considered to be non-taxable benefits. Where an employee-pay-all plan exists and provides for the employer to pay the employee's premiums to the plan and to account for them in the manner of wages or salary, the result is as though the premiums had been withheld from the employee's wages or salary.

    If you are collecting benefits under a disability insurance plan, when the benefits are tax-free, you will not receive a T4A.

    If you have paid a portion of the premiums, the T4A you receive will be for the gross amount of the benefits received, but you can deduct your contributions to the plan. Instead of entering the T4A amount from box 107 on Line 10400 (line 104 prior to 2019) of your tax return, you would enter the net amount after deducting contributions you made to the plan after 1967, if you did not use them on a previous year's return.
    This is making my head hurt.
    I have a shit ton of medical expenses (Physio, Chiro etc) too. Can someone recommend a certifed professional who can help a brother out?

  2. #2
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    Well for the tax free disability benefits. You don't need to report them anywhere.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

  3. #3
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    It's not taxable because it's an insurance benefit, similar to life insurance.
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    As said above, the tax free disability benefit doesn't need to be reported anywhere.

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