| 19(1) | 902709 |
| R.B. Day | |
| (613) 957-2136 |
October 29, 1990
19(1)
Thank you for your letter of September 21, 1990, in which you requested that we confirm that your method of deducting and remitting employee premiums with respect to your company's Long Term Disability Croup Insurance (LTD) Plan would not result in the benefits paid to beneficiaries under the plan being taxable in their hands.
As we understand it, 24(1) We assume that your reference to a non-taxable plan is meant to be a reference to an "employee pay-all" wage loss replacement plan as discussed in paragraph 17 of Interpretation Bulletin IT-428 (copy attached).
Our Comments
The manner in which payments are deducted and remitted to the carrier of an LTD plan does not, in and by itself, answer the question of whether the plan is an "employee pay-all" plan. Such a determination can only be made by looking at the terms of the plan and any related agreements.
A prime question is whether the policy or some other contract (such as an employment contract) places upon the employees the legal obligation to pay 100% of the LTD plan premiums (even though the employer remits the premiums to the carrier on behalf of the employees). Alternatively we would question whether the plan states that the premiums are part of the total remuneration of the employees and are treated as such.
If these questions can be answered in the affirmative, the LTD plan would generally qualify as an employer pay-all plan.
We would caution that our comments are based solely on the information in your letter and should not be construed as an opinion on the facts in your particular situation. Should you wish to obtain such an opinion, you should contact your district taxation office.
We trust our comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch