Deductions from wage-loss replacement plan payments

CPP contributions and EI premiums

Deduct Canada Pension Plan (CPP) contributions and employment insurance (EI) premiums from wage-loss replacement plan benefit payments when one of the following applies:

  • the employer pays benefits directly to an employee from a wage-loss replacement plan where the employer funds any part of the plan
  • a trustee, board of trustees or insurance company pays benefits on behalf of the employer to an employee through a wage-loss replacement plan, when the employer does all of the following:
    • funds any part of the plan
    • exercises a degree of control over the plan
    • directly or indirectly determines the eligibility for benefits

Do not deduct CPP contributions and EI premiums from wage-loss replacement plan benefit payments when the employer does one of the following:

  • does not exercise a degree of control over the plan
  • does not directly or indirectly determine the eligibility for benefits

Note

For more information, including an explanation of what is meant by "funds any part of the plan," "exercises a degree of control over the plan" and "directly or indirectly determines the eligibility for benefits," go to Wage-loss replacement plans.

Income tax and reporting

You have to withhold income tax from all wage-loss replacement plan benefits. If you also have to deduct CPP and EI, report the income and deductions on a T4 slip. If you do not have to deduct CPP and EI, report the income and deductions on a T4A slip.

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