New 2013 Federal Tax Treatment of Accidental Death and Dismemberment Insurance Plans

Date: December 2012

To: Compensation Managers; Heads of Human Resources; Participating Employers

The purpose of this notice is to provide you with information regarding the introduction of a new tax treatment for group sickness and accident insurance plans from the 2012 Federal Budget.

Effective January 1, 2013, employer premiums associated with an Accidental Death and Dismemberment (AD&D) Insurance Plan will become a federal taxable benefit for the employee in the year the contribution is made. Employer payments associated with the Health, Dental or Disability Insurance Plans are not affected by this new tax ruling.

The following Group Benefit Plans, under the Public Service Management Insurance Plan (PSMIP), include an Accidental Death and Dismemberment component:

1. Executive Plan;
2. Members of Parliament Plan; and,
3. The Judges Plan.

For those organizations using the Public Works and Government Services Canada (PWGSC) pay system, PWGSC has already been informed of this requirement and will take the appropriate action.

Participating organizations with their own pay facilities are responsible to ensure that employer contributions associated with this new tax treatment are captured and included in an affected employee's employment income.

Should you have any questions regarding this notice, please write to the Treasury Board of Canada Secretariat, Pensions and Benefits Sector at Contact Pensions and Benefits Sector by E-mail pbs-spas@tbs-sct.gc.ca.

Bayla Kolk
Assistant Deputy Minister
Pensions and Benefits Sector