Disability insurance - Pay your own premiums!

Income Tax Act s. 6(1)(f)

If you receive disability insurance, it will be tax-free if you have paid for the insurance, or if the insurance costs for all employees was paid by the employer, and included in the taxable income of each employee.  If the employer pays for all or part of the insurance and does not include the insurance cost in the taxable income for all employees, then disability insurance received will be taxable, net of any premiums paid into the plan by the employee after 1967.  The following is a quote from the Canada Revenue Agency bulletin IT-428 Wage Loss Replacement Plans:

Where an employee-pay-all plan exists and provides for the employer to pay the employee's premiums to the plan and to account for them in the manner of wages or salary, the result is as though the premiums had been withheld from the employee's wages or salary.

Disability insurance costs are not tax deductible for employees.

Tax tip:  Pay for your own disability insurance, or make sure your employer adds the cost to your taxable income.