CPP Death Benefit and Survivor Payment

Written by G. Earl Ganser on Oct. 17, 2017

CPP death benefit

The CPP death benefit is a one-time, lump-sum payment to the estate of the deceased contributor.  It must be applied for within 60 days of the decedent’s date of death.

The CPP death benefit can be paid to:

  1. The estate of the decedent(if there is an estate)
  2. The person who paid the funeral expenses
  3. A surviving spouse or common law partner, or
  4. The next of kin.

However, the amount received is taxable and is taxed in the name of the beneficiary. If the beneficiary is an individual the benefit received is reported on line 114 of the tax return of the individual receiving the payment.   If the beneficiary is an estate, the benefit can be reported on a T3 Trust Income Tax and Information Return for the estate.  It is not claimed on the last income tax return of the deceased.

The CPP Death Benefit is taxable and must be claimed by the person or the estate who receives it.  The benefit can be as much as $2,500 and consequently the tax can be as much as $1,200.  Therefore, be sure to reserve some of the payment to pay the tax when the income tax return is filed.

Survivor payment paid from a corporation

A corporation is also able to pay a survivor benefit of up to $10,000 to an employee’s estate or their beneficiary in recognition of that employee’s service or employment.  The payment received will be considered non-taxable to the beneficiary but deductible to the corporation.

The amount of the payment should be reported in box 106 of a T4A slip and the slip issued to the individual or estate receiving the payment.  The slip must be filed by the normal deadline for filing T slips, February 28th. The slip will be reported on that person’s return, but is not taxable.

 

If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.

Thanks to Earl Ganser of KWB Chartered Accountants for providing this content.

G. Earl Ganser

G. Earl Ganser

Accountant

Earl has received Finance and Accounting Diplomas from the Northern Alberta Institute of Technology. After working in Property Management for several years, he joined KWB (back then it was known as Koehli Wickenberg) in 2001. Earl chose KWB as it offered exposure to a variety of business services offered in public practice and it was a terrific opportunity for growth.

Currently, Earl is pursuing an Applied Accounting Degree and a C.M.A. designation. Having been raised in rural Alberta, Earl’s knowledge of the farming community provides specialized services for KWB's clients within the Agricultural Industry.

Away from work, Earl has volunteered time with the Strathcona County Food Bank and also enjoys a busy home life with his family and numerous hobbies.

G. Earl's Contact Information

Other Posts by G. Earl

Jun 4 2019
CPP Rate

Beginning in 2019, the CPP rate will be gradually enhanced. This means you will receive higher benefits in exchange for making higher contributions. The Canada Pension Plan (CPP) enhancement will be rolled out in two phases. The 2018 CPP rate was 4.95% of your salary to a maximum yearly CPP contribution of $2,564