Taxes on lump sum CPPD retroactive payment


#1

I’ve been approved for CPPD earlier 2017 and began receiving it along with my LTD payment from the insurance company. However, this incurred a rather large lump sum retroactive payment from CPPD to the insurance company as I was eligible to receive CPPD since 2016.

For tax year 2017, I now have a large taxes payable of 1.5k which would not have happened if CPPD was actually paid to me starting 2016 instead of as a lump sum to my LTD insurance company.

I feel this is unfair as this was entirely due to the timing of the lump sum being paid all in 2017. I know there are disability tax credits I can apply but it involves another application. Is there any way to reduce this CPPD taxes payable?

Thanks!


#2

Yes, you can get it taxed in the year it should have been paid.
I don’t know how but it involves redoing your 2016 taxes.
I would phone the CRA or Service Canada.


#3

Just went through this, as long as you send a copy of the CPP letter showing the amts for each year, they will calculate the taxes as if you had received them in the years shown. It is an election, but if you attach a letter asking for the calculation they will do so. If you go on the CRA forms site, it even shows the form etc. Best to call them and confirm of course.


#4

As other members have stated, you can get Revenue Canada to spread the payments over the years you would have received the money. I believe there is a minimum amount necessary to be attributed to a year, but for the most part this works as you would expect. They will then reassess your past years taxes based on the new income attributed to the past years and you may or may not owe any taxes.


David Brannen

Disability Lawyer with Resolute Legal

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