Earlier this year Canada Revenue Agency (CRA) released the Employers’ Guide to Payroll Deductions and Remittances (T4001). The Employers’ Guide now states that withholding income taxes at source from taxable long and short term disability (LTD and STD) benefit payments is required.
Historically, the Employers’ Guide indicated that withholding income tax at source was not required on taxable STD or LTD plans * The withholding could be done on a optional basis. However, the most recent version of the Employers’ Guide, posted January 2014 on the CRA website, no longer included the above administrative position. CRA has confirmed this change will apply on taxable STD and LTD payment issued effective January 1, 2015.
*NOTE: For Quebec plan members, provincial income tax has always been deducted from the LTD or STD disability benefit payments before a payment was issued.
