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Is Long-Term Disability Considered Income?

For tax purposes, long-term disability benefits may be considered income, and therefore, are subject to taxation but it depends on the nature of the benefits and how they were paid. Certain types of disability payments may also be considered income if a recipient wishes to apply for other types of benefits, such as social assistance.

Situations Involving Taxable Long-Term Disability Payments

Depending on your circumstances, you may or may not be required to pay tax on your long-term disability benefitspayments. Generally speaking, if your employer pays the premiums, your benefits may be considered taxable income. If you pay your own premiums or a portion thereof, you may not be required to pay tax on your benefits since you have already paid taxes on the incomes used to pay those premiums.

To determine if your long-term disability benefits will be considered income under the Income Tax Act, you may be able to inquire with a representative from your insurance provider. Insurance providers are obligated to inform you if your benefits are taxable and provide you with appropriate documentation. They may also withhold a portion of your benefits payment for tax purposes.

How Eligibility for Other Benefit Programs May Be Affected

If you cannot work because of your medical condition and are concerned about how you’ll be able to support yourself or provide for your family, you may consider applying for social assistance. Without a stable source of income, you may qualify to receive income assistance.

However, some social assistance programs might consider long-term disability payments to be reportable income. An individual’s amount of personal income may affect their ability to qualify for social assistance programs. Applicants may be required to thoroughly examine the rules of different assistance programs to determine if their long-term disability benefits might prohibit them from seeking additional assistance.

How Canada Pension Plan Disability Benefits May Help

Long-term disability benefits recipients may be able to receive additional income through Canada Pension Plan Disability Benefits. These benefits may also be subject to income tax.

Although long-term disability benefits may not affect your ability to collect benefits from the Canada Pension Plan, receiving them may reduce the amount of long-term disability payments your insurance company may provide. This may happen when your insurance policy includes a clause allowing them to offset your disability payments based on other income you receive from other sources.

Speak to Preszler Injury Lawyers About Your Benefits

If you have questions about your long-term disability benefits, Preszler Injury Lawyers may be able to provide useful assistance or advice. If you believe your claim for benefits has been unfairly denied, Preszler Injury Lawyers may be able to review your policy and help you appeal an insurance company’s decision.

To discuss the legal options that may be available to you, call Preszler Injury Lawyers at 1-800-JUSTICE for a free, initial consultation.

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151 Eglinton Ave W,
Toronto, ON
M4R 1A6
Fax: 1-855-364-7027
Toll Free: 1-888-608-2111
4145 N Service Rd
Burlington, ON
L7L 4X6
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2 County Ct Blvd #400,
Brampton, ON
L6W 3W8
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105 Consumers Drive
Whitby, ON
L1N 1C4
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92 Caplan Ave #121,
Barrie, ON
L4N 0Z7
Fax: 1-855-364-7027
Toll Free: 1-888-608-2111
380 Wellington St Tower B, 6th Floor,
London, ON
N6A 5B5
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2233 Argentia Rd Suite 302,
East Tower Mississauga, ON
L5N 6A6
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1 Hunter St E,
Hamilton, ON
L8N 3W1
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459 George St N,
Peterborough, ON
K9H 3R9
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22 Frederick Street,
Suite 700
Kitchener, ON N2H 6M6
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116 Lisgar Street, Suite 300
Ottawa ON
K2P 0C2
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10 Milner Business Ct #300,
Scarborough, ON
M1B 3C6
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*consultation offices

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