The Treatment of Payments From Wage Loss Replacement Plans (WLRP) for Canada Pension Plan (CPP) Purposes Has Changed

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Under new legislation that passed in December 2011, payments from an uninsured Wage Loss Replacement Plan (WLRP) are considered employment income and therefore, are subject to Canada Pension Plan (CPP) contributions.

What’s new for Wage Loss Replacement Plans (WLRP) in 2012

The treatment of wage loss replacement plans (WLRP) payments for Canada Pension Plan (CPP) purposes changed over the years. For a period, payments made from certain types of uninsured WLRP plans were not considered pensionable. In December 2011, new CPP legislation clarified that all payments made from uninsured WLRPs are considered to be remuneration from pensionable employment.

This legislation is retroactive to January 1, 2006.

Employers who have not deducted CPP on uninsured WLRP payments in the past, whether those plans follow insurance principles or not, should start doing so effective January 1, 2012. Employers who deducted CPP on these WLRP will not be refunded those deductions. However, the Canada Revenue Agency will consider any request it receives from employees to review their particular situation on a case-by-case basis.

* IT-428, Wage Loss Replacement Plans
* T4130, Employer’s Guide – Taxable Benefits and Allowances

Source: CRA Newsroom


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