Important information about claiming long-term disability premiums

Labour Relations Blog

Jul 2, 2019

Many employees receiving long-term disability insurance (DI) are unaware that they are entitled to a tax deduction on their portion of previously–paid DI premiums.

More specifically, if an employee becomes eligible for DI benefits, your employee portion of premiums paid over the course of your employment may be deducted from your taxes from the disability income you’ve received from the plan. If the total amount of your premiums paid under the plan are higher than the benefits received during the first year in which your benefits began, you can carry over the excess amount to the following year. More information is available on the Treasury Board website here: https://www.canada.ca/en/treasury-board-secretariat/services/benefit-plans/disability-insurance-plan/member-booklet.html#toc4-2

How can I claim the deduction?

Before Phoenix, a letter was automatically issued by departments with the employee portion of premiums paid to the eligible employee and sent directly to CRA. With the implementation of Phoenix and the Pay Centre in Miramichi, this is no longer automatic. This new financial and administrative burden is falling on employees who are already vulnerable, therefore ACFO-ACAF is sharing this information so eligible employees are aware of the proper steps to take to claim this deduction.

While ACFO-ACAF advocates to make this process automatic once again, in the meantime, we recommend that eligible employees take the following steps:

Contact the Pay Centre by submitting a PAR (Work type ‘Benefits’ in Step 2, Sub-type ‘Disability insurance and long-term disability’ in Step 3) requesting a letter confirming the total amount of DI premiums paid.

If your department is not serviced by the Pay Centre, contact your compensation department.

Once you have received the letter, you may submit a request to CRA (and Revenu Quebec, if applicable) for a reassessment of your already–filed tax return.

Instructions on how to change your return: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/change-your-return.html

ACFO-ACAF cannot currently facilitate or speed up the process of claiming this deduction, but if you have any questions, you may contact labourrelations@acfo-acaf.com.