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Changes to withholding income tax for disability benefits

As of January 1, 2015, BC Life and Casualty Company (BC Life) is required by Canada Revenue Agency (CRA) to deduct income tax from short and long-term disability (STD and LTD) benefit payments on all taxable plans.

Income tax deducted is based on government approved income tax tables and the basic personal exemption amount.

This change from CRA is outlined in a new version of the Employers’ Guide to Payroll Deductions and Remittances (T4001). The previous version of the Employer’s Guide allowed tax withholding to be done on an optional basis. Therefore, this CRA legislation overrides the Tax Status section of all BC Life policies for taxable plans.

As of January 1, 2015, BC Life is deducting the newly-required income tax amount from all taxable STD and LTD claims.

This is a reminder of a notice first issued in the fall of 2014 to plan sponsors and BC Life members with open disability claims. The notice also serves as a BC Life policy amendment to the Tax Status in the Schedule of Benefits .

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