Taxable Life Insurance Premium

Employer-paid life insurance premiums are taxable.  Beginning in September 2005 the monthly taxable benefit is as follows:
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The total amount of employer-paid life insurance premiums paid in 2005 needs to be included on each employee’s T4 (tax slip) as taxable income.
If employees pay a portion of the monthly premium that is greater than the life premium, the school can allocate this payment first to the life insurance in order to make life insurance premiums an employee-paid benefit.  As an employee-paid benefit, it is not subject to income tax.  For schools participating in the Non-Taxable Disability Benefit program, the employee contributions to the life premium must be in addition to the employee contributions paid for disability coverage.
Each school that has employees pay the life premium should have a published statement on file stating that employee premium payments will be allocated first to life insurance.

Full Issue: No. 295 - May 25, 2005

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