| 24(1) | 901145 |
| J.D. Brooks | |
| (613) 957-2097 |
19(1)
October 1, 1990
Dear Sirs:
We are writing in reply to your letter of June 8, 1990 in which you queried the taxation of long-term disability, premiums and benefits in the partnership context. You sought confirmation of the following views:
(a) That, regardless whether the premium payments are paid by the partnership on the partner's behalf or are paid directly by the partner, the premiums are not deductible.
(b) That, regardless whether the premium payments are paid by the partnership on the partner's behalf or are paid directly by the partner, long-term disability payments received by a partner from an insurance company are not taxable to the partner.
Our Comments
Paragraph 3 of our Interpretation Bulletin IT-223 dated May 26, 1975 deals with the situation where a taxpayer pays premiums (directly) for an insurance policy which provides the taxpayer with a benefit for loss of income earning capacity such as income disability insurance. The premium on such a policy is a personal or living expense which is non-deductible to the taxpayer and the benefit received by the taxpayer is not considered to be income subject to tax in his hands.
Where the premiums are paid by the partnership of which the taxpayer is a member, the premiums will still constitute a non-deductible expense and the benefit received by the taxpayer is still not considered to be income subject to tax in his hands.
Our comments in this letter represent our general views with respect to the subject matter of your letter. The facts of a particular situation may lead to a different conclusion. Also, our comments in this letter are not rulings and, in accordance with the guidelines set out in Information Circular 70-6R dated December 18, 1978, are not binding on the Department.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch