Ms. X worked for ABC Inc. from 2000 to 2005, with her and her employer each annually contributing $1,500 to a group salary insurance plan (a "Plan"). From 2006 to 2010, Ms. X was employed by WXY Inc. (unconnected with ABC Inc.) and her employer and she each annually contributed $1,200 to a Plan (or $6,000 each in total). In 2010, Ms. X was ill and received $10,000 from the Plan. What is her income inclusion in 2010? CRA responded:
For the purpose of subclause 6(1)(f)(v), only the contributions made by the employee to the particular plan from which the benefits were received by the employee are deductible. As a result, if an employee changes employment and becomes a beneficiary under the new employer's plans, the employee cannot deduct the contributions the employee made in the previous employment from the benefits received from the new employer's plan.
In the situation you described, we believe that the sum of $4,000 will be required to be included in computing Ms. X's income for the year 2010.