Returning Funds to Insurer after being approved

I was approved by CPPD over a year ago. CPPD deposited a cheque in my bank account on April 3, 2018… It’s a fairly large amount. This was, I assumed to be returned to my insurer. CPPD said that their part is complete. When I spoke with my insurer, they said that they had to do all sorts of calculations and would get back to me. I still haven’t heard from them. Could someone please advise me on what I should do now? Thank you

Save the money for when the insurer asks for it.
Put it in a high interest savings account.


You will legally owe them the money even if the drag their feet collecting it back from you. They probably have two years to collect it from you. After that you “might” have some limitation of actions arguments. Meaning you can say their legal right to claim the money expired. However, you need to continue to check in with them and advise them to confirm what you owe them. if you do that consistently for two years and they don’t collect, then you would have good grounds for limitations arguments.

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.

I’m back. I kind of not so gently nudged my insurer on March 15 and was emailed the information today. My insurer advised that they require the lump sum within 30 days. You almost (but not quite) have to laugh at that. Of course CPPD included that lump sum on my tax form. According to my tax forms, it appears that I made a ton of money in 2018. Today I called Canada Revenue to ask if I could claim the amount that I’m paying back to my insurer. Thank goodness I didn’t spend any of it. I cannot claim it for 2018’s tax return because I am paying it in 2019. So, not only am I going to have to pay income tax this year, I will be paying back the lump sum amount. In an earlier post, I said that I have stage 4 cancer. I’m taking all the treatments offered but really need a miracle to make it past the 12 - 13 months estimated to live that I was provided last July. My executor can claim the amount paid back to my insurer when my 2020 income tax is filed. It really burns me that my estate will receive the money when I could really use it now. My advice to those who have received retro pay in a lump sum from CPPD is to really push their insurer to provide reimbursement information in the same year as the payment is given to them.

You can have the lump sum taxed in the years it was supposed to be paid in.
I don’t know how to do it, I think you submit a paper return and request that CRA distribute the lump sum in previous years.

1 Like

I’m sorry. What a stressful situation. I tried to see if I could find free accounting services but can’t find any programs. Are you able to reach out to an accountant?

You may also want to call CRA back…I wonder if you can speak to an auditor or someone else. A lot of times, the people in the call center are freshly hired.

1 Like

Hi EllieMae, I’m sorry this happened to you. I think your advice that folks should try to reimburse their insurer for the CPPD backdated lump sum they receive in the same tax year they receive it is very wise in order to avoid the tax timing issue you encountered.

I don’t know of any way you can get around paying tax now on the CPPD lump sum you received in 2018. However, assuming that your monthly LTD income is taxable, I have a few points for you to consider to help alleviate the tax timing issue you are experiencing in 2019:

1 - If this hasn’t already happened, your insurer will reduce your LTD monthly amount by the gross amount of your CPPD monthly payment. No tax is being withheld from your CPPD monthly payment unless you requested it. The net amount of your “newly reduced” LTD payment plus your CPPD payment will be more than what you received previously. This can really hurt some people because they end up with an unexpected tax bill next spring, but in your case, it will help (unless you are successful with point 2 or 3 below)…

2 - Before you pay back the lump sum to your insurer, ask them how they will handle your T4A for 2019. Some insurers will deduct the amount of your CPPD repayment to them from the amount they report on your 2019 T4A. In the most extreme situation, this might put you in a situation where they don’t need to deduct income tax from your payments and they may have already overdeducted 2019 income tax from you. For example, if you receive $4,000 per month in LTD ($48,000 in 2019) and repay your insurer for $36,000 of CPPD, your 2019 T4A may show an income of $12,000. This sounds complicated, but remember they REALLY want that CPPD overpayment and your problem is a common one. They might be able to adjust the income tax they deduct from your ongoing payments depending, of course, on the amounts involved and CRA schedules. I’m not an expert, but if I was in your situation I would talk to the insurer about this or get an accountant to talk to them.

  1. If the insurance company can’t or won’t help you directly, you may need to go to a qualified accountant for help. Assuming your previous tax situation is really clean (on time, no infractions), I’m wondering whether CRA can help to reduce withholding taxes on your LTD payments going forward in 2019. People who have large tax deductions like childcare expenses, support payments, direct contributions to RRSP’s etc., can fill out forms and submit evidence to CRA to get approval for their employer to reduce tax withholding at source. Perhaps it’s possible to get approval for reduced tax withholding on your LTD monthly payments going forward. This won’t eliminate your tax bill for 2018, but might increase your available funds in 2019. I’m stretching a little bit on this one, hoping something might help you this year …

Hope this helps.


I’m not sure how much you will owe in income tax but you could do a payment arrangement so it’s not so much all at once and apply for interest relief.

Hello. The rep. at the insurance company would only take me so far, then dropped the ball and would not return my calls or emails. I filed a complaint with the Ombudsperson for the insurance company. They returned my call the very next day so that I could give them the facts. The next day, the Manager of the employee who I was dealing with telephoned me to first of all correct the amount that their employee had given me, sent me a secured email authorizing them to withdraw the funds from that account and told me that my employer had agreed to revise their T4 so that I can claim the repayment in my 2018 taxation year. They have not yet withdrawn the funds so I’ve left a message with the manager. I certainly hope that this is the end of this fiasco.

Best of luck.
Sounds like a clusterf :frowning: but hopefully it is all done with. :slight_smile: