Lat year when my company gave me a T4, I saw that in my total Income, it had added the money it spent on my health and life insurance.

This amounted to ~15K, so I ended up paying tax on this amount. Is this normal?

  • $15,000 seems high just for health and life insurance premiums. Ask your HR for a breakdown of the total income figure. Perhaps there are matching RRSP/pension contributions included, or other taxable benefits. Dec 15, 2015 at 15:56
  • Yes, but is it normal to include insurance premiums in your income?
    – Victor123
    Dec 15, 2015 at 15:59
  • 2
    It can be. For instance, long-term disability insurance premiums are usually added to your taxable income to ensure that any disability income you might claim later would not be taxable. Dec 15, 2015 at 16:05
  • @ChrisW.Rea If this is U.S. health insurance, $15k would be entirely reasonable for family coverage (if they're paying the bulk or all of it). Average US family coverage is a tad over $13k. Obviously Canada is a different story, though.
    – Joe
    Dec 15, 2015 at 18:29
  • 1
    @Joe Yes, I should have qualified that as "extended health insurance", as basic health insurance is provided by the universal health care system we have in Canada. Dec 15, 2015 at 18:46

1 Answer 1


Yes, it's normal. If you "buy" your own disability insurance with after tax money, any payout you get is non taxable. If your employer "buys" your disability insurance with their own money, any payout you get is taxable. Since the payout is not 100% of your pre-disability income, most folks strongly prefer that the payout be non taxable.

To achieve this, I pay the premiums on behalf of my employees (including myself) and then add that premium to their salary as a taxable benefit. In effect I paid it to them, then took it from them and used it to buy the insurance. (It has no impact on my corporate taxes since I can either deduct premiums or salaries, same either way.) This ensures they won't pay tax if they should collect. And I have had people collect, and it was non-taxable to them.

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