I was approved for CPP-D in 2025 and received retroactive CPP-D and children’s benefits for a period of 18 months from 2023-2025.
My LTD provider was paid directly from CPP but I received the children’s benefits, which I had to pay back entirely to my LTD provider. I was on my CRA account and see a T4A(P) for myself for the entire amount of my retroactive CPP-D payment, plus the benefits that I actually kept. My children also have T4A(P) tax slips in their CRA accounts for roughly $8,000 per child.
I spoke (at length) with someone at CRA and they told me how to claim the deduction on line 22900 for wage loss reimbursement. I’m somewhat clear on that. However, I have three children who now have $8000 x 3 =$24,000.00 of T4A(P)s for amounts that 1) they never received and 2) I already paid taxes on in 2023-2024.
I was told by CRA to contact my LTD provider for clarification and it’s been crickets. They have not responded and the person who initially have me a verbal breakdown over the phone no longer works there. Does anyone know if the T4A that they give me will reflect all of the money that I paid back to them? For example (not actual numbers) if I made $80,000 on LTD, paid back $30,000 from CPP-D retro and also $24,000 for my children’s benefits, will I only pay taxes on $80,000-$30,000-$24,000=$26,000?
I realize that my children are young and won’t have a large tax burden on $8,000 each. However, I am concerned that my oldest, who is now 18 will have $8,000 in income (that he never received a dime for) plus his own wages when he applies for OSAP. It’s also crummy that he is being taxed on income that the insurance company profited from. (It would be a different story if my policy allowed me to keep the children’s benefits but they don’t.)
I know that I need to be patient and wait for them to issue me my tax slips for 2025 but I am hoping that someone here will know the answer.
I am sorry that I can’t help with your actual question, but I wanted to make sure that you double checked that the kids’ CPP is payable to your LTD company? It’s not unheard of but it’s very very rare since it’s the kids’ income not your income. I would ask them to show me the language in the policy that allows them to deduct it.
Yes, I remember you commenting that on a prior post/question that I had. I do not have the master policy so I haven’t been able to see the exact wording in the policy. All that I have is the insurer’s letter saying “CPPD benefits for yourself and any dependents under age 18 are directly offset from your LTD benefits.” I contacted my union and they don’t have the policy either. I haven’t wanted to rock the boat and just paid them what they asked for. I just hope that come tax time, my T4A shows that they are the ones who received the CPP-D and children’s overpayment. It’s $$$ and I don’t want me or my kids to be double taxed on it.
I’m going through this cppd tax stuff myself for the first time as well. I can confirm the child portion is indeed taxable to your kids, not you.
It sounds like your LTD benefits are taxable so your gross taxable income for the year will be $80k + $30k = $110k. Your CPP-D clawback will be tax deductible as the CRA rep told you resulting in a net taxable income of $80k.
If your LTD benefits are not taxable (like mine) then your net taxable income will be just the $30k CPP-D, which is not tax deductible.
Now to further complicate things since your CPP-D retro payment was for 18 months, CRA will spread it out over your 2023, 2024, and 2025 tax years. They do this back calc after you have submitted your 2025 tax return.
They will do the same for your kids and their child benefit retro payments, so your son won’t get hit with the the full $8000 in one year.
Yes, my LTD benefits are taxable. I’m just confused because I was already taxed on the full amount of the CPP retroactive payment, as well as the children’s portion when I was paid and did my taxes in 2023/2024. I actually had to send slightly more than my retroactive payment/kids payments to my insurer. I don’t know how to adjust my payable to reflect that my kids are now paying the equivalent of $8000 each, meaning I overpaid taxes on $24,000 of income. I probably spent two hours on the phone with CRA and the agent couldn’t find an answer in her research. Might have to pay an accountant this year to get it sorted out.
Thanks for your help. I’m happy to hear that my son won’t be hit with the full $8000.
Hi, now that question I can help you with! Are you registered for myCRA online? If you log in there is a great option to amend a box reported on the applicable year’s tax return. I used it to correct my income for the retroactive CPPD and also to change how much of an RRSP contribution I was claiming since I lost two thirds of my income when I became disabled but had already made my RRSP contribution so I saved the deduction for later years.
Here is my best guess. One thing I don’t understand is how your 18-month retro spans 2023, 2024, and 2025 — I would think it spans only 2 years. Assuming you received the retro and repaid the insurer in 2025:
Include $30K CPP-D income on your 2025 return.
You will get a T1198 for the disabled adult (you) CPP-D showing the breakdown by year. If you don’t get it, contact Service Canada/CPP.
File only your 2025 return; do not amend 2023 or 2024. CRA will allocate the retro across the prior years behind the scenes.
Deduct the full $54K repaid to the insurer (adult + children’s portions) on line 22900 in 2025. The children do not deduct anything.
Each child should file a 2025 return with their own T4A(P) and T1198. They do not need to file returns for prior years; CRA will handle the allocation. If they have no other income, they will pay little to no tax.
The 18-year-old may pay some tax if they have other income.
You’re correct. It was the three months in 2023, all of 2024 and then Jan-March 2025 so a portion of the T4A(P) is money I received but the majority of it (15 months) is the retroactive payment that was sent directly to the insurer.
The 18 months spanned 3 months in 2023, all of 2024 and then 3 months in 2025.
I think that you’re right about the full deduction for myself and the T1198. I was just unsure about the kids since all of their payments currently just offset my LTD and the full retro went to the insurer. I also didn’t know if Service Canada or the insurer issued the T1198 so thank you for telling me to contact Service Canada. I asked both the insurer and my union. Union didn’t even know that children’s benefits offset LTD and the insurer never called or emailed me back. I’ll just have to be patient and wait until the end of February to see what tax documents I receive.
To cover your bases. Call Service Canada and ask them for a T1198 form that lists it the years lump sum payments are attributed too, and include it in your tax filing.
I’ve been told by two accountants that “I need the form" and one that said “I don’t have to have the form” so I’m gonna do it anyway.
Update: I received my T4A from the insurance company. The numbers don’t really add up but it appears that they deducted the entire retroactive payment (mine and my children’s benefits) from my 2025 total.
No T1198 from the CPP-D for either me or the children. Service Canada said that they don’t issue T1198s. (I will call back again when I am closer to filing my taxes to see if someone else has a different answer.) I’d really like a T1198 for my older children but I do have the breakdown of the payments by year that I can use for tax purposes.
I just had another accountant also tell me that Service Canada won’t send a T1198. He advised I just load the generic T1198 form from within my tax Software and just fill it in according to the letter Service Canada had sent when I was approved breaking down what years the lump sum is attributed to.
That’s what I am doing. I have a breakdown of the payments for 2023, 2024, and then 2025. I will use the Service Canada letter if they ask for the breakdown.
Edit: No T1198 is required. It specifically states that CPP-D benefits are excluded from the form and will be calculated automatically. I spent (too much time) on the phone today and both levels of reps said not to submit a T1198. They said that I needed to attach the letter from Service Canada that showed the breakdown of the retroactive payment by year and advised to send a paper form so I can attach the letter. I tried to get clarification from the supervisor about filing electronically but she kept saying that she was having difficulty understanding my question. (I wanted to know if it would be done automatically or if there would be a delay for someone to adjust it like they would in a complec T1-adj.) I had to keep repeating myself and it was clear that there was a language barrier so my question wasn’t fully answered.
As a test, I submitted a return for my child, who is under 18 and has no other income. I just checked and CRA automatically knew it was a retroactive payment for a previous tax year. See below:
You received a Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) lump-sum payment to pay you for earlier CPP or QPP benefits you did not get. Since you got the payment for this reason, it qualifies for a special tax calculation to see if it is better for you to include the payment in your income for 2025 or in the year the payment applies to. In your case, it is better to include the full amount of the payment in your 2025 income.
(I wanted to know if it would be done automatically or if there would be a delay for someone to adjust it like they would in a complec T1-adj.) I had to keep repeating myself and it was clear that there was a language barrier so my question wasn’t fully answered.