Who Pays the Premium, and What the Revenue Agency Publishes About It
By Jose Salloum, Financial Security Advisor (Conseiller en sécurité financière) | September 2026
THIS IS NOT TAX ADVICE AND THIS IS NOT AN ACCOUNTING PRACTICE. This article reports what the Canada Revenue Agency and Revenu Quebec publish on their own pages, read in September 2026. It performs no calculation, it states nobody’s position, and it does not tell any reader what to do. Anyone whose own situation is in question should consult a professional accountant or a tax specialist, and should read the agency’s own page, which is free.
In plain language: this is general education, not a recommendation. What is right for you depends on circumstances we have not seen, and that is what a first conversation is for.
Before you act on anything about tax on this page
This practice is licensed in life and health insurance. It is not an accounting practice, it does not prepare returns, and nothing on this page is tax advice or an opinion on anybody’s tax position.
- Speak to an accountant before you act. Not after. If tax is any part of the reason a decision is being considered, a professional accountant who has seen the actual file is the person to decide it with, and this page is not a substitute for that conversation.
- The rules move. Tax rules, thresholds, rates, forms and deadlines change, most of them at least once a year, and a rule described here may have been amended since this page was built.
- The tax authority is the authority. For anything a reader intends to rely on, the Canada Revenue Agency and, in Quebec, Revenu Quebec publish the current rule themselves, free, and that is where it should be read.
- Nothing here is a calculation of anybody’s tax. This page describes how a rule is written. It does not work out what any reader will pay, recover or owe, because that depends on a whole return and on facts no page can see.
- No professional relationship is created by reading this. No reliance should be placed on it, and nothing in it is legal advice either.
In plain language: we are not accountants. Anything here that touches tax is general information, it changes, and it should be checked with an accountant and against the tax authority’s own page before anybody uses it for anything.
Key Takeaways
- THIS IS GENERAL EDUCATION AND NOT TAX ADVICE. The practice is not an accounting practice. An accountant or tax specialist is the person to ask about any actual situation.
- The Canada Revenue Agency publishes the rule itself, in plain words, on its own page for line 10400 of the return.
- It states that amounts received for loss of income from employment payable under a sickness, accident, disability or income maintenance insurance plan, also called a wage loss replacement plan, must be reported as income.
- The same page carries a note that where the taxpayer pays the entire cost of the plan, the amounts received are not taxable.
- So the same benefit can land differently depending on a fact settled years earlier by somebody else: who was paying for the plan.
- The agency’s payroll material adds that a plan funded entirely by employee contributions is not a wage loss replacement plan for those purposes.
- An older interpretation bulletin on the subject is ARCHIVED by the agency and carries its own archived notice. It is background, not current guidance.
A household comparing two disability arrangements usually compares what each one pays. There is a second question that decides how much of that actually arrives, it is answered on a government page anybody can read, and it turns on something nobody thinks of as a tax decision at all: who was paying the premium.
The rule the agency publishes about itself
Before anything else on this page: this is general education, the practice behind this site is not an accounting practice, and anybody whose own return is in question should take it to a professional accountant or a tax specialist.
With that said, the rule is not hidden and it is not complicated to find. The Canada Revenue Agency publishes it on its own page for line 10400 of the return, the line for other employment income.
The agency states that amounts received for loss of income from employment that are payable under a sickness, accident, disability or income maintenance insurance plan, also known as a wage loss replacement plan, must be reported as income on the return.
On the same page the agency carries a note going the other way: where the taxpayer pays the entire cost of the plan, the amounts received are not taxable.
Why that matters years before anybody is ill
Read together, those two statements mean that one fact decides which sentence applies, and that fact is who paid.
It is worth sitting with how ordinary that fact looks at the time it is settled. An employer sets up a plan and pays for it, or shares the cost, or deducts it from pay. Nobody in the room is thinking about a tax return. The arrangement is usually described as a benefit rather than as a decision.
And yet it is the fact the agency’s own page turns on. A household comparing arrangements on what each one pays is comparing the figure before this question has been asked.
The agency’s payroll material adds a detail in the same direction: a plan funded entirely by employee contributions is not a wage loss replacement plan for those purposes.
A concept, not a recommendation
Everything below is an illustration written to show how a structure works. No person in it is real, no figure in it is a projection, and nothing in it is a recommendation to you or to anyone else. The numbers are round because they were chosen to make the arithmetic visible, not because they are typical, available or attainable.
What a contract would actually do depends on the insurer, the product, your age and health, the underwriting decision and the contract you sign. A recommendation can only follow an analysis of your needs conducted with you by a licensed representative. Canadian Wealth Creation Centre Inc. is paid a commission by the issuing insurer when a policy is placed, and you should weigh anything here knowing that.
An illustration: two arrangements, one question nobody asked
This illustration carries no figures, performs no calculation and names no product, insurer, employer or person. Nobody in it is real. Its subject is a question, not an outcome, and nothing in it is tax advice.
Imagine two people whose arrangements were described to them in the same terms, in the same month, by people who meant well.
One arrangement was set up and paid for by an employer. The other was set up and paid for by the person themselves.
Nobody asked, at the time, which of the two sentences on the revenue agency’s page would apply, because the question does not sound like a question until the year the benefit is being received.
The point of the illustration is only this: the question was answerable on the day each arrangement was set up, by asking who pays, and the person to take the answer to is an accountant.
What this page will not do
It will not calculate anything. It will not say what any reader’s position is. It will not describe any contract or any employer plan, because the answer depends on how that plan was set up, on who contributed and when, on amounts previously claimed, and on facts an article has no access to.
It will also not treat an archived document as current. The agency published an interpretation bulletin on wage loss replacement plans many years ago. That bulletin is archived, and it carries the agency’s own notice saying so. It is useful background and it is not current guidance, and a page that quoted it as though it were would be doing the reader harm.
The Quebec side has its own material. Revenu Quebec publishes a page on salary insurance benefits, in French, addressing its own withholding and contribution questions. A reader in Quebec has two administrations to consider, which is one more reason the question belongs to an accountant.
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What a household can usefully do is know which questions exist and take them to the right person.
Who pays for this plan, in full or in part. Is it set up as an employer plan or as an individual arrangement. If contributions are deducted from pay, who is treated as having made them. Has anything changed since it was set up.
Those are questions for an employer’s human resources or benefits office and for an accountant, in that order. They are not questions an article can answer and they are not questions that should be answered from memory.
Where to read this at the source
The line 10400 page is published free on canada.ca by the Canada Revenue Agency, and it is short. The payroll material on wage loss replacement plans is on the same site. The Quebec page on salary insurance benefits is published by Revenu Quebec.
Each was read on 23 September 2026, and each can be revised without notice, which is the final reason to read the agency rather than an article, and to take an actual situation to an accountant.
Sources
- Canada Revenue Agency, line 10400 other employment income, canada.ca, read 23 September 2026
- Canada Revenue Agency, payroll material on wage loss replacement plans, canada.ca, read 23 September 2026
- Canada Revenue Agency, Interpretation Bulletin IT-428, wage loss replacement plans, canada.ca, ARCHIVED, read 23 September 2026
- Revenu Quebec, salary insurance benefits, revenuquebec.ca, read 23 September 2026
Frequently Asked Questions
Is this tax advice?
No. This is general education and the practice behind this site is not an accounting practice. Anyone whose own situation is in question should consult a professional accountant or a tax specialist, and should read the revenue agency’s own page, which is free.
What does the Canada Revenue Agency publish about disability benefits?
On its page for line 10400 it states that amounts received for loss of income from employment payable under a sickness, accident, disability or income maintenance insurance plan, also known as a wage loss replacement plan, must be reported as income on the return.
Does it matter who paid for the plan?
The agency’s own page carries a note that where the taxpayer pays the entire cost of the plan, the amounts received are not taxable. What that means in any actual situation is a question for an accountant, because it depends on how the plan was set up and on who contributed.
What about a plan paid for entirely by employees?
The agency’s payroll material states that a plan funded entirely by employee contributions is not a wage loss replacement plan for those purposes. Again, the application to any actual plan belongs to an accountant.
Is the old interpretation bulletin still good?
It is archived. The agency publishes it with its own notice saying the page is archived and will not be updated. It is background rather than current guidance.
Is Quebec different?
Quebec has its own administration and Revenu Quebec publishes its own page on salary insurance benefits. A reader in Quebec has two administrations to consider, which is one more reason to take an actual situation to an accountant.
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About the author
Jose Salloum is a Financial Security Advisor (Conseiller en sécurité financière) licensed by the Autorité des marchés financiers in Quebec, by the Financial Services Regulatory Authority of Ontario, and by the Insurance Council of British Columbia. Licensed since 2001, he works with Canadian families, business owners and incorporated professionals.
He is the founder of Canadian Wealth Creation Centre Inc. (CWCC), registered with the AMF, and of its educational branch IBCFinancial.com. He holds the Infinite Banking Concepts® Authorized Practitioner certification from the Nelson Nash Institute, a private certification rather than a regulatory licence.
CWCC is not registered with CIRO and does not provide securities advice. This page is general education and not advice on any individual file.
Important disclosures
This page is education, not advice. The content is general information prepared by Canadian Wealth Creation Centre Inc. It does not take your circumstances into account and is not a recommendation to buy, hold or cancel any contract. CWCC is not registered with CIRO and does not provide securities advice. The firm places insurance in Quebec, Ontario, Alberta, British Columbia, Manitoba and New Brunswick; clients elsewhere are served by advisors licensed in their province.
Nothing here was written with your file in front of us. Read it to understand the subject, then judge it against your own situation, ideally with someone who is licensed where you live and who has seen your numbers.
This is not tax advice, and the tax treatment depends on your own circumstances. The tax treatment described depends on the contract remaining exempt under the Income Tax Regulations and on the reader’s individual circumstances. A withdrawal, a surrender or a policy loan may be a disposition under the Income Tax Act, and amounts above the adjusted cost basis may be taxable in the year they occur. Tax rules change. Canadian Wealth Creation Centre Inc. is licensed in life and health insurance. It is not an accounting practice, it does not prepare returns, and nothing on this site is tax advice or an opinion on any reader’s tax position. Anything a reader intends to rely on should be confirmed with a professional accountant and against the current published rule of the Canada Revenue Agency and, in Quebec, Revenu Québec.
The tax result is not automatic and it is not unconditional. It rests on the contract staying within the Canadian rules and on your own situation. Before you rely on any of it, talk to an accountant who has actually worked with these contracts.
Illustrations and projections are not predictions. Any figures, examples or illustrated values are hypothetical, are shown to explain a mechanism, and are not a forecast of the performance of any contract. Actual values will differ and may be lower than those shown. Past dividend scales do not predict future scales.
An example is there to show how the parts move, not to tell you what you will get. Any real illustration you are shown should be read on its guaranteed columns first.