If you are off work due to the anxiety and depression related to covid, and receive short term disability income benefit from your employer, can you also claim the CERB? Is short term disability benefits employment income or a benefit?
That’s a good question. Here’s my answer. Of course, please don’t take advice from an anonymous person on the internet.
The short answer is you cannot receive STD benefits, regardless of the reason you are off work. and CERB benefits at the same time.
My assumption is you are receiving more than $1,000 in a gross payment (i.e. before income tax, EI, CPP and other payroll taxes) in the relevant 4 week CERB period. IF income tax and other payroll taxes are deducted from a payment to you it is always considered employment income in the eyes of the Canada Revenue Agency and the Government of Canada.
To quote the Government of Canada website:
"If an employee has stopped working but is still receiving benefits from their employer (e.g. medical) are they eligible for the Canada Emergency Response Benefit? "
Stopping work does not mean that the employee has severed all ties with their employer. The employer can continue to provide NON-CASH benefits to the employee and these will not impact their eligibility for the Canada Emergency Response Benefit."
I capitalized “NON-CASH” benefit because short-term disability is a CASH benefit and is considered “employment income”. There may be the odd exception and I don’t know anything about Quebec which can be different from a benefits perspective, but STD does not fall into the same category as reimbursement for health and dental benefits.
Here’s a link to the extensive list of questions and answers on the Government of Canada’s website.
How is that related to you?
Just because someone else speeds through a red light and doesn’t get caught means you can speed through a red light.
The rich can afford to speed through a red light. Fines for the rich are less punishing than the fine to the poor.
My Short term disability is unearned income. The unearned income is taxable because my employer pays the premium. I still stopped working due to COVID 19 and did not earn an income.
From my experience when you submit your short term disability earnings to CRA they are declared as an employment income. You receive a regular T4 at the end of the year. They also deduct CPP contribution amount from your STD paycheck. This is my STD experience. Not sure if it applies to everyone.
There is no monthly breakdown on your T4 when CRA receives it so they may assume that you earned those money in January and February. But if they ask you to provide a monthly breakdown from your payments then I assume you won’t be eligible if you received more than $1000 in March/April/May/June.
I think they do because they are declared on your tax return as an employment income.
I wouldn’t mess with CRA.
I looked up the information about my short-term disability. It was a salary continuance plan administered by my company’s payroll so I continued to receive my salary for 6 month.
Then they sent me a T4 at the end of the year. It looked like this:
box 14 - employment income - $1
box 22 - income tax deducted - $1
box 16 - employee’s CPP contributions - $1
box 24 - EI insurable earnings - $1
box 26 - CPP/QPP pensionable earnings - $1
box 18 - empoyee’s EI premiums - $1
box 52 - pension adjustment - $1
On my tax return it looked like this:
line 101 - employment income - $1
line 206 - pension adjustment - $1
line 427 - total income tax deducted - $1
line 448 - CPP overpayment - $1
and so on
So this is how my short-term disability looked like when I submitted it to CRA. It was classified as an employment income on both T4 form and a tax return.
According to David’s article there are different types of short-term disability:
Different benefits must be taxed differently. My short-term disability was treated as an employment income.
My short term disability benefit is taxed the same way. So is our long term disability also taxed.
But it is not earned employment income. You can not use STD or LTD, even if taxed as above, to count towards the 5000 total income requirement.
The only benefit you can not collect according to the passed Bill C-13 is EI benefits.
And the CRA website specifically says that someone receiving disability is still eligible for the CERB, as long as they meet the other criteria.
My LTD is not taxed because I paid the premiums myself. If your company paid them for you then it is taxable.
It’s not really earned but again depends on how they classify it.
Not sure about that. I think it is a good question to ask CRA. But I assumed if they tax it as an employment income then it can be counted towards $5,000 income requirement. Seems like another loophole to me.
Looks like they didn’t take into consideration all the nuances of disability. Next year when CRA starts sorting this out it will face a lot of Notices of Objection because of this missed details in their Bill C-13.
Personally I wouldn’t get into all this CERB thing even though it has so many loopholes because CRA can give you a lot of hard times. I don’t want them to suddenly start paying attention to my finances or Service Canada to decide to reassess my CPP disability. One thing I learned dealing with these guys is to lay low
To my understanding the CERB is only for those that have lost their income due to the Civid19. Hense way people collecting a Pension, Old age or CPP aren’t eligible to collect CERB.
Plus you would have to claim this to your STD/LTD company.
This would depend on how the short-term disability plan is set up – if it is an income continuation plan (where payroll taxes are deducted - eg EI, CPP), the you would not be able to receive the CERB. If it is a pure insurance policy, where no payroll taxes deducted from the monthly benefit, then you could collect both, but the STD provider may be able to offset the CERB based on the offset clauses in the particular policy.
By payroll taxes I am just referring to the EI and CPP deductions, not income tax deduction. That can be deducted from both types of STD benefits.
Again, this all hinges on a person being able to prove that the COVID-19 caused the work absence, which can be difficult in cases of anxiety or other mental illness. I certainly could be done if the medical evidence was strong on that point, but I see this as being a grey zone where some people will not be able to provide the link.
Disability Lawyer with Resolute Legal
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