Will I be receiving a t-slip from my LTD insurer for my 2018 income tax return? This is the first year that I’ll be filing with this info, so I’m not sure how things are taken into account on my return.
Also, is the tax deduction for lawyer fees from recovering the retro funds from LTD claimable on line 232? Thanks for any help!
If you paid 100% of the premiums for STD and LTD you will not receive a t-slip. If your employer paid part of it then you will receive one.
You will receive a t-slip for CPP-D if you are receiving it.
I already received my CPP slip so just waiting on one from LTD. Thanks! 
In our experience insurers send these out by the end of February each year. If you don’t have it in early March follow up with your lawyer or the insurer.
David Brannen
Disability Lawyer with Resolute Legal
The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-282-5188 to speak with a member with our disability claim support team.
Thank you @David_Brannen , I actually received it the day after I posted, go figure! I have my T1198 and my CPP-D slip, so hopefully should be able to file without needing a tax accountant, I’ll just need to do the paper filing instead of online, and requwst the special tax calculation.
Hey Nip,
One of the questions you posted above is a very good question…
" [is the tax deduction for lawyer fees from recovering the retro funds from LTD claimable on line 232? ]"…
Given you didn’t receive all of the retro because some went towards the cost of legal fees, I’m guessing that you will get dinged by CRA on the full amount, even though you didn’t receive it all. I’d be interestedin what the legal team has to say on this point???
It will show as the whole amount - I can claim the legal fees on line 229 as a deduction for recovery of lost wages. The tax on the retro was taken first before paid out of course, so I’ll be putting in the request for a special tax calculation to allocate it to the specific years it should have been received. At least that way it won’t be such a hit!
Can someone help me regarding the LTD & tax return sitiation? 2 questions:
Yes, the T1198 has to be issued by the insurance company that paid out the settlement. You would need to contact them to ask them to issue it. Normally, this needs to be something negotiated as part of the terms of settlement; however, if it was not included in the terms of settlement, they may still agree to do it for you. If you had a lawyer, you should get your lawyer to get in touch with the lawyer who represented the insurance company to ask about them giving a T1198.
David Brannen
Disability Lawyer with Resolute Legal
The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-282-5188 to speak with a member with our disability claim support team.
Yes, you can claim lawyers fees paid to obtain payment of LTD benefits, even if they are paid in a lump sum. I have consulted a chartered accountant in the past and we both concluded that you likely can only claim the legal fees related to the taxable portion of the settlement. So you may not be able to claim the entire fee, if the taxable portion of the lump sum payment was small compared to the settlement overall. This is a grey area and I am not sure if there has been a tax ruling on it. We take the percentage of settlement that was past benefits and then apply that same percentage to the legal fee. So if your taxable portion of the lump sum was $40%, then you can claim 40% of your legal fee. Again, this is the conservative approach and you should seek your own tax advice if you plan to claim 100% of the legal fee in a situation like this. When it comes to Revenue Canada I suggest being very conservative as a general rule.
We provide our clients with a declaration, signed by the lawyer that sets out all the information and facts Revenue Canada needs to approve a legal fee tax dedication. Many lawyers will not do this in my experience, so you may have to ask the lawyer for it, if needed by Revenue Canada.
However, given that you were reinstated, then it is likely 100% of the lump sum funds were past benefits, so you can probably claim the entire legal fee. Again, check with your own tax experts as it will depend on what was paid in your settlement, how it was structured, and how much of it you paid taxed on.
David Brannen
Disability Lawyer with Resolute Legal
The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-282-5188 to speak with a member with our disability claim support team.
Thank you so much Mr. Brannen…really appreciate your lightening-fast response. And would you know if the contingency legal fees are tax-deductible?
Outstanding information and generosity of your time. Appreciated beyond words. Paddy
Yes, see my answer above.
Getting ready to file and I was wondering if someone knew - I am assuming that disbursements taken out of my settlement (taxable and non-taxable) cannot be claimed on my return, only legal fees after disbursements? For example, several hundred dollars went to GST Taxable Disbursements (Physicians notes, courier, postage, photocopies, etc.) as well as Non-Taxable Disbursements (Filing fee – Statement of Claim).