Tax on CPPD Retro Pay forwarded to LTD?

I know this has been discussed here before, but I’m having a hard time finding it. Simply put, will my CPP-D retro pay lump sum be counted as income on my 2018 return even though I will be forwarding that entire amount to my LTD insurer? I’m thinking yes?

Is the cppd lump sum for years before 2018?
If yes, you can have the income spread over the years it was for.
I would phone CRA.

Yes, I’d have it itemized for the months it should have been received (part of 2016, all of 2017, part of 2018). I’m considering getting someone to do my taxes for me for 2018, things are more convoluted this year for sure. My lawyer provided the breakdown and form for the LTD retro, which is great. I was told that the contingency fee paid to my lawyer out of my settlement could be used for tax purposes, but will have to look into that further.

It sounds very complicated, good luck.

Fees paid to a lawyer to recover LTD money are claimable as a tax deduction. The best practice is for your lawyer to provide you with a sworn statutory declaration (similar to an affidavit) that explains the information Rev Canada needs to know and attaches his or her invoice as an exhibit. We do this for all clients for both CPP disability and any LTD settlements that are taxable.

You will likely run into problems if you just send in the lawyers invoice without explanation.

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.

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Thanks very much, David - I have the detailed statement of account and breakdown of fees, but nothing showing as a sworn statutory declaration. I’ll check again but otherwise will request this from my lawyer. :slight_smile:

My lawyer’s office has informed me that as long as I have their statement of account and the T1198 form, I should be good to go. :crossed_fingers: