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CPP Contributions Now Required for Self Insured Disability Benefits

In sum
On December 15, 2011, an amendment (Bill C-13, Part 15) passed into law that requires Canadian employers who self-insure their disability plans to remit employee Canadian Pension Plan (CPP) contributions for disabled employees.

While the Canadian Life and Health Insurance Association (CLHIA) has been in discussions with officials of the Canada Revenue Agency (CRA) regarding Bill C-13, many of the procedural issues for deduction, remittance and reporting of CPP contributions are still unresolved. We expect those discussions to continue, and we will provide more details as they become available.

It is confirmed by CLHIA, however, that the CRA indicated they would administer this change on a go-forward basis from the date it became law.

The passing of this amendment into law reverses the Federal Court of Appeal’s decision in Toronto Transit Commission vs Canada (National Revenue) that stated that CPP contributions were not required for disabled employees under a self-insured disability plan.
Is it time to consider insuring your disability plan?
Insured plans are not subject to CPP or EI premiums. Contact your Account Manager for a quote and for more information about the advantages of insuring your disability plan with BC Life.
While the provisions are retroactive to January 1, 2006, CRA has indicated that this is intended to prevent requests for refunds of previously remitted CPP contributions that relate to periods of disability, and will only apply on a go forward basis from the date it became law.

Bill C-13 does not apply to Employment Insurance premiums. However, the Federal Court of Appeal concluded in 2002 that EI premiums were required with respect to uninsured disability benefits.

Next step
As a first next step, BC Life strongly encourages all employers with self-insured STD and LTD plans to seek out legal advice on how this legislation will affect them. We also refer you to the CRA website for more specific details.

Please contact your Account Manager or Plan Advisor with any questions, or to discuss what support we may be able to provide.

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