Taxpayer has amount in Box 107 of T4A (THE CANADA LIFE ASSURANCE COMPANY) for Wage-loss replacement benefit plans
I’m getting a diagnostic:
Income: An amount of wage-loss replacement benefits has been entered with no amount of deductible premiums paid.
I asked the taxpayer if they paid any premiums and they said they didn’t even receive the T4A (I downloaded it via AFR).
Can anyone comment? I’m thinking they likely didn’t pay any premiums and it was likely paid by the employer.
It’s usually included in box 14/40 of their T4. I had to get my client to go to HR and get a list of premiums paid over the years that had been included in their T4 income to back this up. All premiums paid since the client started work or the last time they had to report Wage Loss Replacement benefits and claimed the earlier years against that income. I had to amend the return for the earlier one for my client as the premiums got missed.
In such a case I ask the client if there was a deduction on his pay cheque for wage loss insurance. If there was, I then ask him to obtain from his employer a total of the insurance premiums he paid since last claim. The employer will know if the insurance program was totally paid by then or shared. In many cases the employer pays the full premium and adjusts on some other fringe benefitI. If he does not get the statement, I let the matter drop. The insurance company issues a slip indicating taxable compensation. If no slip is issued, there probably is not any taxable benefit
That may work if the employee has paid premiums for ONLY wage loss replacement. But usually the amount in T4 box 40 includes premiums paid for life insurance. It would not be correct to use those amounts - you would need additional info to figure out how much of the premiums relate to wage loss replacement vs life insurance.
I generally talk to the client, and explain that the premiums are deductible, but would probably be small. The amount of time and effort to figure it out would outweigh any tax benefit.
If they can’t get details about the premiums paid, or don’t want to bother about it, just check off the review message in TaxCycle, and leave the premiums at 0.
I just checked and the taxpayer has two T4s both with amounts in box 40 of approximately $500.00/each totaling around $1,000 between the two T4s.
That, though, could be for ANY form of taxable benefit. Best to go to HR and get a statement.
Thank you all for your helpful replies!!