Repayment of EI Sickness Benefits?


#1

I’m wondering if anyone has dealt with this, as I haven’t had luck getting through to Service Canada for the past 2 days, and haven’t found a clear answer online.

For 13 weeks at the end of 2016, I applied for and received the EI Sickness Benefit, as I was on unpaid leave from work due to illness and fighting for my LTD. This past week is when I finally received my retroactive LTD pay for the period starting in September of 2016 until now. I am assuming that now I will be having to pay back the benefit I received as it was within that time frame, but am not sure if they will want it back all at once or not. Any experience with this? Thank you!


#2

There may be other ways to repay it, but for me I had to indicate it on my income tax forms as a social benefit repayment (line 235 and 422), and so it became a balance due in the taxation year after I had received it. I was able to pay it back out of the insurance company funds I had just received. I’m not sure if I got a new statement for the amount or if I went by the tax statement I had previously received showing the total of my EI benefits and the (small) amount of tax they had withheld at source.


#3

Thank you! Of course I have already done my taxes (I had one payment listed as 2017 so got a T4E for a small amount with 0% repayment), so I’m assuming that my 2016 and 2017 will need to be reassessed as my retro falls into 3 months of 2016, all of 2017, and the first 2 months of this year. Sigh. I think I may need to get an accountant to do it so I don’t mess it up! The nice thing is that my lawyer’s percentage of the lump sum can be used as a tax write-off.


#5

I am not an accountant but I would be inclined to do it myself - I would check with CRA on whether to revise the 2017 return to include the whole EI repayment as I think you are supposed to repay it as soon as you receive insurance benefits for the same time period. Or you may only have to repay it when you file next year. I had received mine after the tax filing deadline but I’m not sure if you have to report it for 2017 since you are aware of it before your tax return was due.

For your lump sum payments the returns for the 2016 and 2017 years I think will be taken into account when you file your 2018 return next year as CRA will consider your disability payments applicable to those years - they calculate the tax owed as if you received the benefits in the prior years, but they don’t reassess the old returns. This is also what happened in my case and I think Joanne provided a detailed explanation of how.that works in a recent thread.


#6

That’s a good point. I’m wondering if I should wait until the 2018 return though. I do have a T1198 from my lawyer which has broken down the amounts pertaining to each year so that i can request the special tax calculation, and that doesn’t require a reassessment per se. I’ll take a gander through the post you mentioned again - thank you!!! :blush:


#7

The tax treatment of your lump sum payments is definitely a matter for next year since you received the income in 2018 and it should be pretty straightforward as you describe.

I’m just not sure if CRA will want the EI repayment before that - they may see it as a separate issue.

It is annoying that our taxes get so complicated just because the insurance company was late in paying a claim.

Good luck!