Are Canada Pension Plan disability benefits taxable?
Yes. They are taxable and all benefits must be included in taxable income. There is no normal withholding of income tax at source. For that reason, you must budget for the amount of tax you will ultimately owe, or you can contact the Canada Pension Plan Office to make regular deductions on account of income tax. With respect to the issue of arrears of Canada Pension Plan benefits paid by way of lump sum, the individual filing the tax return has the option of declaring them in the year they should normally have been paid or the year the lump sum was received, whichever is more favourable. We believe that the legal fees incurred in enforcing your rights to collect Canada Pension Plan benefits are tax deductable. However, you should contact your tax advisor in this regard. Private disability benefits are usually received on a tax-free basis where the premiums for the insurance were paid on an after-tax basis. If the premiums were paid on a before-tax basis, the benefits are usually taxabl
