On October 31, 2018, Julia Williams participated in a panel discussion at the University of Ottawa on “Interview Landmines.” The panel was a Q&A with lawyers offering insight into how to deal with difficult questions about race, gender, sexual orientation, family plans, and more during recruitment processes.  Julia would like to thank the University of Ottawa Association of Women and the Law (UOAWL), one of the largest equity-seeking groups at the University of Ottawa, for inviting her to participate in this event.

Disability Benefits Taxable Implications

With the month of April just around the corner, you may be getting ready to prepare and file your taxes for 2020. Many people ask us whether their Long Term Disability premiums are a taxable benefit in Canada. While there is no easy yes or no answer here, we have provided the important information you may need below. 

Do You Pay Income Tax on Disability Benefits in Canada? 

If you have been in receipt of disability benefits, you will need to understand the tax implications that apply to the disability benefit you have received. Different tax rules will apply depending on the type of benefit received, who paid the premiums for the benefit, and the total amount of income received by an individual in a given tax year.  

Below, you will find summary information about the tax implications when you have been in receipt of disability benefits. This information provides a general review and the implications for your specific situation will differ depending on your specific circumstances. For answers about your specific circumstances, you should consult with a lawyer specialized in this area of practice or a tax professional. 

EMPLOYMENT INSURANCE (EI) SICKNESS BENEFITS

The Employment Insurance program offers temporary financial assistance (up to a maximum of 15 weeks) to people unable to work because of sickness, injury or quarantine. These benefits are usually the first benefits received by an employee after they have exhausted their sick leave and they are unable to return to work because of continued injury or illness.

Employment Insurance benefits are taxable, which means that federal and provincial taxes will have been deducted from your EI payments prior to receipt. Depending on your total income for 2020, you may be required to repay a portion of EI benefits received when you file your taxes.   

If you were in receipt of EI benefits, you will receive a T4E, “Statement of Employment Insurance and Other Benefits” slip, which will indicate if you are required to repay a portion of the EI received. The T4E is issued by Service Canada. 

SHORT-TERM DISABILITY (STD) OR LONG-TERM DISABILITY (LTD) BENEFITS

Short-Term Disability (STD) benefits and/or Long-Term Disability (LTD) benefits provide some income protection when a person is unable to work due to an illness or injury. You may access STD and LTD coverage through purchasing personal insurance coverage and/or through accessing group insurance coverage. Group insurance coverage is generally accessed via an employee benefit plan. 

For more information on when and how to file a claim for Short-Term or Long-Term Disability benefits, please refer to our disability benefits page.

Whether tax is payable will depend on who has paid the premiums for the STD and/or LTD benefits. If any portion of the premiums for STD and/or LTD disability benefits were paid by your employer, the benefits are taxable. If all the premiums for your Short-Term or Long-Term Disability insurance were paid by you, the benefits are generally not taxed. 

Given the importance of the taxability of these benefits, employers, unions, and employees should all be concerned about who pays the premiums on these benefit plans.

If you are unsure as to who is paying the premiums for your disability plan, you can contact your insurance provider and they will notify you as to whether your benefits are taxable or not.

CANADA PENSION PLAN DISABILITY (CPPD) BENEFITS/ QUÉBEC PENSION PLAN (QPP) DISABILITY PENSION

The CPP disability benefit and QPP disability benefit are available to assist people who are unable to work in any capacity due to severe and prolonged disability. If you have qualified, and are receiving Canada Pension Plan Disability Benefits or Quebec Pension Plan Disability Pension, you should be aware that these benefits are taxable income. All the amounts received from CPP or QPP must be reported in your tax return. 

You would receive a T4A(P) “Statement of Canada Pension Plan Benefits” tax slip at the beginning of the year if you received benefits from the CPP or the QPP. The T4A(P) will indicate the amount of benefits you received in the previous year. If you received QPP benefits, you would also receive a RL-2 “Relevé 2: Retirement and annuity income” slip. 

DISABILITY TAX CREDIT (DTC)

The CRA offers several tax credits to offset a disabled individual’s tax liability. A common tax credit accessed by people receiving CPP Disability Benefits is the Disability Tax Credit (DTC). This is a non-refundable tax credit that is available to persons who are experiencing severe and prolonged disability. 

The DTC tax credit assists to reduce the amount of income tax payable for persons with disabilities. Acknowledging that there are unavoidable additional expenses for persons with disabilities helps to provide greater tax equity. 

Accessing this tax credit requires a separate application, and not all persons in receipt of disability benefits will qualify. To apply, a specific form (Form T2201) must be completed by a medical practitioner and submitted to the CRA. The CRA then determines eligibility based on the information provided by the medical practitioner. 

A notice of determination will be provided to the applicant and will indicate which year(s) the applicant is eligible to claim the DTC. If the notice indicates that an applicant does not qualify, it will explain why. The notice may also include information about other programs that are available to individuals who qualify for the DTC. 

If a person would have been eligible for the DTC in prior years, but had not applied when they filed those taxes, they can seek a reassessment of the prior tax returns through the CRA.  

IMPORTANT LONG TERM DISABILITY TAX FORMS

CANADA PENSION PLAN DISABILITY (CPPD) BENEFITS/ QUÉBEC PENSION PLAN (QPP) DISABILITY PENSION

• T4A(P) Statement of Canada Pension Plan Benefits
• RL-2 Relevé 2: Retirement and Annuity Income

DISABILITY TAX CREDIT (DTC)

• Form T2201

HELP FOR PERSONS WITH LOW INCOME 

If your income is below qualifying thresholds, you may be able to access free assistance to complete your tax returns through a community organization. More information about free tax clinics to assist Canadians can be found by following this link. 

Consult one of our experienced Long-Term Disability lawyers at Raven, Cameron, Ballantyne and Yazbeck LLP if you have any questions.

On February 6, 2019, David Yazbeck spoke on a panel on advocacy for sexual and reproductive health and rights. The panel was organized by Action Canada for Sexual Health and Rights and Oxfam Canada. Panellists touched on aspects of advocacy from the grassroots to international efforts. Remarks were also given by the Parliamentary Secretary to the Minister of International Development, Kamal Khera, highlighting the federal government’s efforts in promoting sexual and reproductive health and rights, particularly its support for feminist and women’s rights organizations.

David is acting as pro bono counsel for Action Canada for Sexual Health and Rights, which has intervened in an application for judicial review before the Federal Court. This application challenges the federal government’s requirement that organizations receiving summer jobs funding attest to their programs being consistent with the Canadian Charter of Rights and Freedoms. Action Canada has intervened to support the government’s position that this requirement is legitimate and necessary.

On February 13, 2019, Morgan Rowe will present a workshop on human rights law, worker’s rights and how these two sets of rights can be used to help individuals with disabilities challenge barriers in employment. The workshop will be hosted by OPIRG Carleton and the Carleton Disability Awareness Centre.

For more information about the workshop, please visit the event page.

What Are Long Term Disability Benefits Offsets?

What Are Long Term Disability Income Offsets?

In the Long Term Disability Benefit context, offsets are other sources of employment or employment-like income. Offsets will be deducted from the amount of Long Term Disability benefit allowed to a claimant by an insurance company.

How Does LTD Coverage Work?

Insurers typically design their insurance Long Term Disability coverage contracts so they become ‘payers of last resort.’ This means that other sources of employment income are deducted, or offset from what the LTD insurer would otherwise pay in Long Term Disability benefits.

If you’re a unionized public servant, your LTD coverage is provided by SunLife and if you’re a public service executive, the insurer is Industrial Alliance. For public servants, SunLife and Industrial Alliance are the only alternatives. If you work in the private sector and your employer is providing LTD coverage, the offsets will likely be similar to those in the public service plan. If you’re insuring yourself, you can always negotiate fewer offsets, but they will cost you more money in premiums. If you don’t want any offset, the better alternative might be Critical Illness Insurance, which gets you a specific fixed payment for a specific injury or illness.

Here are some examples of how LTD coverage works:

• Suppose you have LTD benefits which pay you $5,000 per month and you become eligible for a pension or a medical retirement which pays $3,000 per month. The insurer will see this new source of income and reduce the payment of $5000 to $2000 per month. The employee will still have a monthly income of $5,000, but it will consist of two cheques totalling $5,000, of which the insurer will only pay the difference between the pension and the original LTD benefit.
• Suppose you are unable to work and you’re not able to provide the same level of financial support to your family. It’s likely that you think you’re going to get LTD benefits plus Canada Pension Plan Disability (CPPD) and your kids are going to be looked after, at least to some extent. If you are getting $1,000 a month from LTD, but your CPPD gives you $800 a month and there’s a $200 monthly child benefit for each of your three kids, that’s a total of $1,400 a month from sources outside your LTD payment. All that money, including the $200 for the children, are classified as offsets and will reduce your LTD to zero.
• If you are in a car accident and you are paid damages for injuries, that would not be an offset. If you are paid damages for loss of income that would be an offset.
• Savings or registered retirement savings plans (RRSPs), are not considered offsets and cannot be deducted from Long Term Disability benefits.

Can the Insurer Force You to Apply for Long Term Disability Offsets?

The answer will depend upon the language of the particular insurance policy. Frequently, the answer will be yes, particularly for such benefits as Canada Pension Plan Disability Benefits.  If the insured person fails to apply for the CPPD benefits, the LTD insurer will assume they have and will deduct the value of that benefit from the LTD, even if they do not apply.  

In the case of CPPD, that value is approximately $14,000 annually. There may even be an obligation to appeal from a negative ruling concerning CPPD.

For benefits such as pensions, if a person is in receipt of a pension, that amount will likely be considered an offset and deducted.  

If a person is not getting a pension, whether they must apply for a pension will usually depend on the language of the insurance policy.

Severance Pay

Severance is usually considered an offset and the insurance company will deduct 100% of it from LTD.  So, there can be substantial benefits to remaining an employee while you’re on LTD and it may not be necessary to terminate your employment. This is important because many people who lose their job and go on LTD prior to getting a severance package, think they will get to keep both. If maintaining your employment status is not possible, there are strategies that might be available that allow you to keep some or all of the severance package. 

The takeaway here is that you should not assume you are going to have multiple sources of income if you are on LTD because the insurance company will want most of it. The insurance companies say that without offsets, everyone’s premiums would be higher. This is true, but they will not give people the option of paying higher premiums in exchange for greater protection. The complexities of Long Term Disability are not something most people even think about. They get a job, they take the benefits they are offered and forget about it . . . until they are faced with dealing with long-term sickness or injury.

Is Long Term Disability Insurance Mandatory?

No, it is not a legal requirement but you would be unwise not to have it.

The biggest financial asset for most people is not their house but their ability to work. Simply put, if you and your family need income in order to live, you need Long Term Disability insurance, which will give you 50-70 percent of your former income. Without LTD, you are left with the Ontario Disability Support Programme at around $10,000-$12,000 a year and Canada Pension Place Disability which is around $14,000 a year. If you were making a reasonable income prior to your injury, going down to that level is not pleasant. 

Have questions? Reach out to our team of experienced Long Term Disability lawyers to learn more about LTD coverage.

When selecting a Long Term Disability Benefits Lawyer, or Long Term Disability Law Firm, it is important that they have the knowledge and experience in areas that will have a direct impact on your Long Term Disability claim and/or severance package. These areas of expertise include employment law, pension law, and human rights law.

Why Hire an Employment Lawyer?

Battling with an insurance company can be stressful and the interaction with employment law can be complex. A lawyer skilled in the intricacies of Long Term Disability Benefits law can ease the pressure, especially for someone interacting with an insurance company while simultaneously battling with physical or emotional ill-health. Getting caught between an insurance company pushing you to return to work and an employer who doesn’t think you’re ready to return to work can be stressful. Having a lawyer to strategically navigate you through that insurance company-employer stand-off to get your rightful Long Term Disability rights or severance package, is a heavyweight off the shoulders. In Long Term Disability cases you often do not have to pay legal fees upfront. Under a contingency arrangement, a client only pays when he or she gets money from the insurance company. This arrangement gives clients much needed legal expertise and significantly more power when taking on the financial might of an insurance company. 

Getting the Right LTD Answers

Employment law can impact your Long Term Disability claim against an insurance company. What happens if I lose my job while on Long Term Disability benefits? What happens if I receive a severance package while receiving Long Term Disability payments? Does my pension continue to accrue? What do I do if my insurance company asks me to apply for Canada Pension Plan Disability benefits (CPPD benefits)? What happens if you get fired while you are claiming Long Term Disability benefits? These are all questions a skilled employment lawyer can answer.

Frustration of Contract

Frustration of contract is a legal term. When an employee is unable to return to work, employers will raise the concept of frustration of contract or will claim that the employment contract is frustrated. A frustrated contract effectively terminates the employee and employer relationship.  This is a common occurrence when clients are off work and receiving disability payments. Usually, an employer will claim frustration of the contract after an employee has been off work on disability for approximately two years. If an employee can show medical evidence that there is a reasonable prospect of returning to work, an employer may not be able to claim frustration of contract. If an employer is successful, it would result in termination of employment without the non-statutory elements of a severance package.

Severance Package and Long Term Disability

It is possible that an employer offers a severance package to an employee who is on Long Term Disability leave. However, it is important to consult a disability lawyer before agreeing to such a severance package. Most Long Term Disability contracts state that any income received will be used to offset your Long Term Disability payments. In other words, the severance package amount you receive could go directly into the pockets of your insurance company. Your lawyer may be able to restructure a settlement with the employer to avoid offsetting an LTD payment. 

Is Long Term Disability Insurance Mandatory?

No, it is not a legal requirement but you would be unwise not to have it. In the event that you are unable to work, long term disability coverage will provide income replacement of approximately 50 to 70% of your pre disability salary. Without LTD, you may qualify for Ontario Disability Support Program at around $10,000-$12,000 a year and Canada Pension Plan Disability at about $14,000 a year until age 65. 

Canada Pension Plan Disability Benefits

Many insurance contracts require eligible employees to apply for Canada Pension Plan Disability benefits. A lawyer with Canada Pension Plan Disability benefits expertise will be able to assist you through this process.

Please see our article “Applying for a Canada Pension Plan Disability Benefit.” If you’re cut off LTD benefits, it is often a good strategic move to apply for CPP disability benefits. To qualify for those benefits you must demonstrate that your injury or illness is severe and will be prolonged. These benefits can also be paid up to 12 months retroactively but if you’re already getting LTD benefits any retroactive benefit may be clawed back by the insurance company. Please see our article on LTD Benefit Offsets. 

Further details can also be found here on the official Government of Canada website.

Pensions and Long-Term Disability

If you are contributing to a pension plan where your pensionable time accrues while you are receiving Long Term Disability benefits and short term disability benefits you will want a lawyer knowledgeable in pension law to represent you. Federal public servants who have been off work for a period of 18 to 24 months will typically receive an options letter requiring them to resign, medically retire or return to work with approval from Health Canada. Negotiating a settlement for LTD benefits with the insurance company can be a complex process because the insurance company will want to claw back medical retirement benefits that the employee would be entitled to if they medically retire before age 65. 

Do I Need a Human Rights Lawyer?

LTD is not a human right but it is a sensible, if not vital, self-protection for all working people. When people return to work on a gradual or employer-accommodated basis, an employee can feel pressured by the insurance company and an employer. For example,  the employer can fail to provide appropriate accommodations for the employee and pressure the employee to stay on LTD until he or she is fully fit to return to work. In contrast, the insurer will usually insist that the employee do the exact opposite by pushing the employee to attempt a return to work. When an insurance company is pushing an employee to return to work too soon or if the employer is failing in its duty to accommodate, consider consulting a Long Term Disability Lawyer with experience in human rights law.

Can an employer refuse a return to work while on Long Term Disability? An employer has the duty to accommodate an employee who wishes to attempt a return to work. However, this duty is not limitless, an employer has the obligation to accommodate an employee’s return to work up to the point of undue hardship. Please see our article “The Duty to Accommodate”. Insurance companies will sometimes argue that it is reasonable for the employer to accommodate the employee’s limitations and cease to pay Long Term Disability benefits. This is not necessarily a valid reason to terminate Long Term Disability benefits and the employee may wish to appeal the insurer’s decision. 

Return to Work

As mentioned above, an employer has the duty to accommodate a return to work, and a partial return to work can prevent an employer from being able to claim that an employment contract is frustrated. Some insurance contracts will allow the insured person to receive income from their employer – in addition to Long Term Disability payments – without being subject to an offset. The insurance policy typically has provisions pertaining to a rehabilitation program allowing the employee to claim employment income while in receipt of LTD benefits for a certain period of time. 

Choosing a Long Term Disability Benefits Lawyer: Other Considerations

When applying for Long Term Disability Benefits or when your Long Term Disability Benefits are denied, choose a lawyer who has contacts with medical experts that will assist in providing evidence to support your claim.

• Check Google reviews for the firm or the lawyer; and
• Meet with multiple lawyers and law firms to determine the best fit for you.

Please see the following articles concerning what to expect should your Long Term Disability be denied:

1. 1. WHAT TO DO IF (AND WHEN) YOUR CLAIM FOR LONG TERM DISABILITY (“LTD”) INSURANCE IS DENIED
   2. NAVIGATING YOUR CLAIM FOR LONG-TERM DISABILITY (“LTD”) INSURANCE

On January 28, 2019, RavenLaw appeared before the Québec Court of Appeal to argue in support of a challenge under section 2(d) of the Canadian Charter of Rights and Freedoms to restrictions on collective bargaining in the Federal Public Sector Labour Relations Act. Appearing for the intervener, the Public Service Alliance of Canada, RavenLaw argued that section 113 of the Act, which excludes pension and staffing issues from collective bargaining, violates the freedom of association, including by preventing workers from exercising their constitutionally protected right to strike on important workplace issues.

PSAC was represented by Andrew Astritis from RavenLaw.

RavenLaw is pleased to announce that David Yazbeck has been appointed to the Board of Directors of Copyright Visual Arts – Droits d’outeur Arts visuels (COVA-DAAV). COVA-DAAV is the business operating name of CARCC, which is a copyright collective founded by Canadian Artists’ Representation – Le Front des Artistes Canadiens (CARFAC) in 1990 to assist artists in administering their copyrights. David is also a member of the Board of CARFAC and, as part of the governance structure for COVA-DAAV, CARFAC is entitled to appoint board members to the COVA-DAAV Board.

David is excited for this opportunity to continue his advocacy efforts on behalf of visual artists in Canada, particularly as it relates to protecting and promoting artists’ copyright in Canada and Quebec. Any interested artists from Canada and Quebec may affiliate with Copyright Visual Arts.

On October 12, 2018, Morgan Rowe presented as part of the Union of Taxation Employees’ National Health and Safety Conference. Morgan’s presentation addressed the proposed changes to federal harassment protections introduced by Bill C-65, as well as recent cases on harassment and work place violence in federal workplaces.

On October 15, 2018, David Yazbeck appeared before the House of Commons Standing Committee on Industry, Science and Technology, acting on behalf of Copyright Visual Arts – Droits d’auteur Arts visuels (COVA-DAAV). Currently, the Committee is undertaking a review of the Copyright Act. David’s presentation related to recommendations by COVA-DAAV regarding improvements to the Act which would assist visual artists.

In particular, COVA-DAAV is recommending three changes to the Act:

1. The inclusion of limitations on the educational fair dealing provisions so that the interests of visual artists and users are more balanced, and interference in collective licensing is removed;
2. The removal of the 1988 cut-off date for the exhibition right so that artists with works created prior to that date would benefit from that right as it applies to those works; and
3. The establishment of the artist’s resale right, a right which would require the payment of a royalty on transactions of secondary public art sales (i.e. where an artist’s work is sold subsequent to the first sale).

While all of these measures may seem minor, visual artists have among the lowest incomes in Canada and each measure would benefit visual artists immensely.

The full presentation can be viewed here.