Are Canada Pension Plan child benefits deductible from an IRB?

Summary: Unlike CPP disability benefits, CPP child benefits are not deductible as payments for loss of income from the IRB.

What is the CPP Child Benefit, and when is it paid?

Let’s first look at what a qualifying child is:

  • The natural child of the CPP contributor
  • A child “adopted legally” or “in fact” by the CPP contributor while under the age of 21
  • A child “legally” or “in fact” in the custody and control of the CPP contributor while under the age of 21

Further, the dependent child must be either:

  • under the age of 18, or,
  • if between the ages of 18 and 25, they must be a full time student.

In regard to the benefit itself, there are two different types available:

  • For a child who is in the care of an individual receiving the CPP disability benefit; and,
  • For a child who was in the care of an individual at the time of the individual’s death.

In both instances, the individual must have made enough contributions to CPP to qualify. To determine whether an insured might qualify for CPP disability benefits, see our blog on that very topic.

The CPP child benefit is paid monthly and fluctuates annually with the Consumer Price Index. The payment is received as a single lump sum amount, combined with the CPP disability benefit. It is for this reason, you must be able to assess if CPP child benefits are being received.

For the purposes of this blog, we will only consider CPP child benefits being received with the CPP disability benefit — as deceased individuals are not eligible for IRBs.

What decisions support this?

As indicated above, CPP child benefits are not deductible as payments for loss of income from the IRB. In Blakely and State Farm (FSCO A09-003232), which referenced the previous Statutory Accident Benefits Schedule (SABS) legislation, the arbitrator referred to the section in the Schedule, which states that payments for loss of income under a benefit plan include payments of disability pension benefits under the CPP. He found the word pension was included to distinguish the CPP disability pension benefit from the CPP child benefit. The Service Canada payment explanation further supports this finding by clearly stating, “Any benefits paid for your children are their income, even if you received the payment.”

The wording in s.3(7)(d)(i) of the current SABS has not changed from the wording in s.2(9)1 of the previous SABS, which indicates “payments of disability pension benefits under the Canada Pension Plan” are considered payments for loss of income. For this reason, it would appear the CPP child benefit is still not deductible under the current SABS.

What about CPP child benefits being received in the pre-accident period?

If the amount being received relates to a prior incident, the CPP child benefit is not included in the pre-accident income, as it does not meet the criteria of gross employment income outline in section 4(1) of the SABS.

For this same reason, CPP child benefits received in the post-accident period are not considered income, and are not deducted as such pursuant to s.7(3) of the SABS.

Does that mean CPP child benefits being received prior to the accident would be deductible from the IRB payable as temporary disability benefits pursuant to s.47 (O. Reg. 34/10) or s.60 (O. Reg. 403/96)? No, not here either. As discussed in greater detail in our CPP disability benefit blog, these benefits are not considered temporary based on past arbitration decisions.

What does this mean for you?

The key issue for you will be ensuring what you deduct as CPP disability benefits does not include CPP child benefits also, as they are received in a single monthly payment. So we recommend you start by asking yourself the following questions:

  • Is the insured receiving, or potentially eligible to receive CPP disability benefits?
  • Do they have a dependent child who is under the age of 18, or is between the ages of 18 and 25 and in school full time?

If so, you may need to request a little more information. A letter from Service Canada would be available to the insured confirming if and how much CPP child benefits are being received, including a breakdown of the two types of benefits. Based on this, you would consider only the CPP disability benefits in quantifying the IRB payable.

If you have any questions, don’t hesitate to contact us at answers@adsforensics.com or at 1-800-380-7908 ext ASK (275).

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