CPP Disability, DTC and Severance Pay

CPP Disability
1

Hello, first of all, thank you for providing this great service. It’s very much appreciated.

I was recently approved for CPP Disability benefits and the Disability Tax Credit. (DTC)

In addition, my workplace just offered me an employment continuation severance package where they’ve agreed to pay my regular income for 6 months. I’m wondering if this income will affect my CPP payments and whether I need to report this amount or not.

I’m also concerned with how all of this may affect my 2025 taxes as I have 3 years of CPP backpay that should be deposited any time now and I’m worried that adding in these severance payments will cause me to owe thousands of dollars in taxes.

Can you please suggest what my best options are?

2

The best advice I can give is to engage an accountant. There are just so many variables to this.

I’m assuming you aren’t getting any LTD payments from a private group benefits insurer. If you are, that could really complicate things.

1 Like
3

Thank you for your response.

I settled my LTD with a lump sum payment back in 2022 and do not have any continuing payments for LTD.

I was thinking that I would provide my workplace with my RRSP account and have them direct deposit the 6 months of transition payments into my RRSP, for tax sheltering.

Does this sound like a good plan?

4

Yes, direct it to an RRSP if you can.