When is a ‘death benefit’ not a ‘death benefit’? Apparently, when it is a benefit received under the Canada Pension Plan.
In The Queen v. Cumming, [1976] DTC 6265 (FCTD), the Court held that a CPP death benefit is not a ‘death benefit’ for the purposes of the Income Tax Act. As a result, the $10,000 exemption provided by the Act for a death benefit is not available for CPP death benefits. Instead, the full amount of the latter type of benefit, which is a benefit received under the CPP for the purposes of the Act, must be included in income as required by clause 56(1)(a)(i)(B) of the Act. This point is addressed in the commentary for line 19 of the trust return in the T3 guide.
