Payments from an employer-funded Wage Loss Replacement Plan (WLRP) are subject to CPP contributions, according to the Canada Revenue Agency (CRA).
Under legislation passed in December 2011, payments from an employer-funded WLRP are considered employment income and therefore are subject to CPP contributions.
A WLRP is an arrangement between an employer and employees or between an employer and a group or association of employees, under which provision is made for indemnification of an employee, by means of benefits payable on a periodic basis, if an employee has a loss of employment income as a consequence of sickness, maternity or accident, according to interpretation bulletin IT-428 from the CRA.
Employers who have not withheld CPP on employer-funded WLRP payments in the past should start withholding CPP contributions on these amounts effective January 2012. The CRA will provide updated information on this by Jan. 13, 2012.
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