22 November 2006 External T.I. 2006-0189441E5 - Change to employer paid disability plan -- summary under Paragraph 6(1)(f)

Where an employee-pay-all disability plan becomes a plan in which the employer makes 100% of the contributions, an employee in receipt of benefits at the time the plan is converted may continue to receive non-taxable benefits in such amount and for such length of time as may have been specified in the plan when benefits commenced. If an employee's benefits commence after the conversion, the benefits will be included in income under s. 6(1)(f) and, given that such conversion results in a new plan, contributions made by the employee to the prior plan cannot be deducted from benefits received from the new plan.