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 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 November 6 and 7, 2018, Morgan Rowe presented to University of Ottawa students as part of two panels on careers in labour law. Morgan spoke specifically about her experiences working on behalf of unions and individual employees. Morgan would like to thank Professor Ravi Malhotra and the Employment and Labour Law Student Society for inviting her to participate on these panels.

Please note our office will be closed from December 22, 2018 until January 1, 2019. We will reopen for regular business hours on Wednesday, January 2, 2019 at 8:30 am.

Warmest wishes for a happy holiday season and a wonderful new year.

We are thrilled to announce that Jessica Greenwood is joining Ravenlaw!

Jessica has been successfully advocating on behalf of unions and employees her entire career. She is a proud Kingstonian and Queen’s alumni. Before joining our firm, Jessica worked at one of the largest trade unions in the country where she regularly appeared before labour arbitration boards. She brings talent, results and experience.

Jessica will be leading our Kingston office where she will continue advocating on behalf of workers and unions.

In addition, Peggy Smith, who has been working in association with our firm since January 1, 2018, will continue to service Kingston area clients.

Welcome Jessica!

The dreaded answer is:   “it depends…”

Fortunately, the Ontario Court of Appeal in Barber v The Manufacturers Life Insurance Company  (Manulife Financial) (“Barber v Manulife”)[1]  has clarified whether to file a claim for long term disability benefits in the Ontario Superior Court or to proceed in arbitration.

Firstly, one must determine whether the essential character of the dispute concerns LTD benefits.  If so, does the claim’s essential character arise from the interpretation, application, administration or violation of the Collective Agreement?  If the answer is yes, than it is the arbitrator, not the court, that has exclusive jurisdiction to decide.[2]

But wait! How do you know whether the essential character arises from the interpretation, application, administration or violation of the Collective Agreement?  Simply put, how do we determine whether the arbitrator has the jurisdiction to decide benefit entitlement claims such LTD claims?

The Ontario Court of Appeal[3] has adopted the following four categories from Brown & Beatty which help answer this question:

1. Where the collective agreement does not set out the benefit sought to be enforced, the claim is inarbitrable;
2. Where the collective agreement stipulates that the employer is obliged to provide certain medical or sick-pay benefits, but does not incorporate the plan into the agreement or make specific reference to it, the claim is arbitrable;
3. Where the collective agreement only obliges the employer to pay the premiums associated with the insurance plan, the claim is inarbitrable; and
4. Where the insurance policy is incorporated into the collective agreement the claim is arbitrable.

In Barber v Manulife, Adrian Barber became disabled from her employment as a Port Hope police constable. She applied for LTD benefits under a group policy insurance; insured by Manulife. The collective agreement, which governed Ms. Barber’s employment, required the employer to offer disability insurance coverage to the Port Hope Police Association’s members.  Ms. Barber appealed Manulife’s decision to terminate her benefits at the Superior Court of Justice. However, her claim was dismissed because the motions judge found that the collective agreement granted exclusive jurisdiction to the labour arbitration process. In other words, the Superior Court found it did not have jurisdiction over Ms. Barber’s matter.

The Ontario Court of Appeal agreed with the motions judge. The collective agreement established Ms. Barber’s rights to LTD benefits. In fact, the provisions within the collective agreement did more than merely oblige the employer to pay premiums for insurance: they covered the terms, the amount of the disability benefits and the definition of total disability.  The Court of Appeal noted that the employer could have changed insurers as long as the benefits defined in the collective agreement continued.

Takeaways

An arbitrator may have jurisdiction in determining LTD entitlements when:

• The collective agreement does more than merely oblige the employer to pay insurance premiums;
• The provisions of the collective agreement covers the terms of the LTD benefits;
• The amount of the disability benefits is specified;
• “total disability” is defined in the collective agreement;
• The insurance policy is incorporated in the collective agreement.

The courts will have jurisdiction, even in a unionized setting, when the collective agreement does not set out the benefit or only obliges the employer to pay the premium. Jurisdiction and the time lines will be determined by this analysis, so examine the collective agreement and the jurisprudence carefully before deciding whether to grieve or sue.

[1] Barber v The Manufacturers Life Insurance Company (Manulife Financial), 2017 ONCA 164.

[2] Weber v Ontario Hydro, [1995] 2 SCR 929, at paras 11, 52 and 54.

[3] London Life Insurance Co. v Dubreuil Brothers Employees Assn. (2000), 49 OR (3d) 766, at para 10.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

On November 28, 2017, RavenLaw appeared before the Supreme Court of Canada to argue in support of a challenge under the Canadian Human Rights Act to discriminatory provisions of the Indian Act registration scheme.

RavenLaw appeared on behalf of the intervener, the Public Service Alliance of Canada, one of 14 organizations that intervened to argue in favour of a broad and purposive approach to interpreting human rights laws. Particularly, PSAC intervened to argue that the Canadian Human Rights Act should allow individuals to bring human rights challenges against government programs and benefits schemes, even where the discrimination in the program or benefit arises because of legislation.

Andrew Raven, Andrew Astritis, and Morgan Rowe from RavenLaw appeared on behalf of PSAC.

Dependent Children benefits resulting from Canada Pension Plan Disability (“CPPD”) benefits may be deducted from the Long Term Disability (“LTD”) benefits.  Some insurance contracts will explicitly exclude CPP Dependent Children benefits from being deducted from LTD benefits while others will state that monthly LTD benefits are reduced by CPP disability benefits including the benefits dependent children. However, insurance contracts are not always as explicit. As such, an ambiguous clause could lead a judge or decision maker to conclude that the CPP Dependent Children benefits should not be deducted from the monthly LTD benefits.

In Hennig v Clarica Life Insurance Co.[1] (“Hennig”) the Court decided that the insurance company was not entitled to deduct any CPP Dependent Children Benefits from the LTD benefits.  Importantly, the Court held that the CPP Dependent Children benefits were found to be beneficially owned by the children under the Canada Pension Plan Act[2]. The double recovery resulting to the family was found to be irrelevant because the disability coverage was bought and paid for privately. Therefore, the plaintiff was entitled to the full benefit provided by the insurance contract without the insurer being entitled to deduct the Dependent Children benefits.

The Court reached this decision by applying the contra proferentem interpretation rule. This Latin maxim means that if the words in a contract are ambiguous the contract should be interpreted against the one who wrote the words. In this context, the contra proferentem rule, favoured the interpretation of “received” as meaning beneficial and legal receipt rather than benefits paid in trust to the insured’s children. The Court concluded that the portions of the insurance company’s policy which purport to allow such a deduction were ambiguous because they did not clearly indicate whether monies received by the plaintiff fell within the types of payments the insurance company was entitled to deduct from any disability payments.

The case of Dubasoff v Mutual Life Assurance Company of Canada[3] is another illustration of the courts reluctance to deduct child benefit amounts from Long Term Disability payments.

For unionized employees, arbitrators will look at the collective agreement to determine whether the benefits for dependent children will be deducted.  See our article: “Where should unionized employees appeal their Long Term Disability benefits claims”, if you are unsure whether you must file a claim in Superior Court or file a grievance to contest the denial of Long Term Disability benefits.

In London (City) v London Civil Employees Local 107[4], the arbitrator concluded that the CPPD child benefits did not fall within the ambit of “all income sources participated in by the employer and employee” The Arbitrator emphasized that there must be a sufficiently clear expression of intention by the parties to deduct the CPPD child benefits from the LTD benefits.

In Ruffolo v Sun Life Assurance Company of Canada[5], the opposite conclusion was reached.  There, the plaintiffs were receiving Long Term Disability benefits under group insurance policies issued by the defendant insurer. They also received disability benefits for their dependent children under the Canada Pension Plan Act. The insurer deducted the CPPD Dependent Children Benefit from the LTD amounts payable under the insurance policy. The insurance policy provided that “monthly LTD benefits are to be reduced by the disability income to which the disabled member is entitled under a government plan (including benefits under the Canada Pension Plan, including benefits for dependent children)”. The Ontario Court of Appeal upheld the Trial Court’s decision, finding that the CPP Dependent Children benefits were incorporated by contractual consent into the concept “disability income to which the disabled member is entitled”. As such, the insurance company was entitled to deduct the benefits for dependent children from the LTD benefits.

Takeaways:

• There must be a clear intention in the insurance contract to allow the deduction of Dependent Children Benefits from LTD benefits;
• If the insurance contract explicitly provides that Dependent Children Benefits are to be deducted from LTD benefits, it is likely that the Court will enforce this provision;
• If the language in the insurance contract is ambiguous a court will likely conclude that the Dependent Children Benefits should not be deducted from LTD benefits.

It is important to examine the insurance contract, the collective agreement (if applicable), the legislation and the jurisprudence carefully to determine whether the Dependent Children Benefits can be deducted from LTD monthly benefits.

[1] Hennig v Clarica Life Insurance Co. (2001), 33 CCLI (3d) 280; affirmed (2003), 2003 Carswell Alta 269 (Alta CA)

[2] Canada Pension Plan, RSC, 1985, c C-8.

[3] Dubasoff v Mutual Life Assurance Co., [1995] 123 DLR (4^th) 577 (SK CA)

[4] London (City) v London Civil Employees Local 107 [2006] L.V.I. 3602-6.

[5] Ruffolo v Sun Life Assurance Company of Canada, 2009 ONCA 274 (leave to appeal to SCC refused)

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

Raven, Cameron, Ballantyne and Yazbeck LLP is pleased to announce its association with Peggy Smith LLP.  Peggy has been serving union and individual clients in the Kingston area for more than 30 years in the fields of labour, employment and human rights.  Together, we look forward to serving unions and individuals in the Kingston area.