Changes to taxable long-term and short-term disability plans

Effective June 26, 2017, there will be a change to how Manulife administers taxable long-term and short-term disability plans. Previously, the Canada Revenue Agency (CRA) and Revenue Quebec (RQ), required that income tax be deducted from disability benefit payments at source. While the amount of tax deducted was calculated using government approved income tax tables, these tables didn’t allow for an exact calculation of deduction amounts. In order for Manulife to deduct and remit a precise amount of tax to the government on behalf of the plan member, we will now use the calculation formula used by the CRA/RQ.  

What does this mean? 

Because of this change in calculation method, plan members may notice a reduction to their benefit payments starting on June 26, 2017. Since the adjusted tax deduction will be automatic, members affected by this change will receive an Explanation of Benefit (EOB) communication included with their June 2017 payment.  

If you have any questions about this change, please contact your Manulife representative for more information.