If you’re a Canadian over the age of 18 years old that lives outside of Quebec and makes over $3,500 a year, you’ve most likely contributed to the Canada Pension Plan (CPP).
Usually, half the contribution is taken as an automatic deduction from every paycheck you get and your employer pays the other half.
If you work for yourself, you would have to make the whole contribution yourself.
However, if a CPP contributor passes away while their pension is still active, that’s where the CPP Death Benefit comes in.
The CPP Death Benefit is the one-time sum paid to the deceased contributor’s estate or other successors.
Eligibility Requirements for CPP Death Benefit
There are certain requirements that the deceased person must meet to qualify for the CPP Death Benefit.
First off, the contributor must have contributed to the CPP for a minimum of:
- one-third of the calendar years in their contributory period for the base CPP, but not under 3 calendar years, or
- 10 years (calendar years)
If the deceased person lived or worked in and outside of Canada, you can consult these country-specific guidelines.
Canada has agreements with many other countries that allow for eligible persons to receive a payment or benefit on behalf of the deceased contributor.
If the deceased person lived or worked in Quebec, they may have contributed to both the CPP and the Quebec Pension Plan.
In that case, the calculation of the death benefit is based on both pension plans.
So, if the deceased contributor:
- Contributed to the Quebec Pension Plan;
- Lived in Quebec when they passed;
- Lived outside of Canada, but their last province was Quebec;
Then you need to contact Retraite Québec.
You may also be eligible for other benefits in addition to the CPP Death Benefit.
If you were legally married or the common-law partner of a contributor who is now deceased, you may be eligible for Survivor’s pension.
You can learn more about Survivor’s pension here.
If you are the natural or adopted child of a contributor who is now deceased and are either under 18 years old or in between the ages of 18 and 25 and enrolled in a recognized university or college, then you might be eligible for benefits for children under 25.
To apply for the CPP Death Benefit, you need to complete Form ISP1200 – Application for CPP Death Benefit, gather the mandatory certified true copies and then either mail or drop it all off at any Service Canada office.
Make sure you have your SIN as well as the deceased person’s SIN noted on all the documents.
If you need to contact Service Canada with any questions, you can find their up-to-date contact information and business hours here.
CPP Death Benefit Payment Dates
There is no specific date that the CPP Death Benefit is paid out every year – it will depend on when you apply.
Once you apply for the CPP Death Benefit and Service Canada has received all the information required, it takes about 6-12 weeks to receive the payment.
Is the CPP Death Benefit Taxable?
Yes, the CPP Death Benefit is taxable.
If there is an estate, then the death benefit is taxable to the estate.
Report the amount on line 19 of the trust’s T3 for the year in which the payment is received.
If the CPP Death Benefit is payable to a beneficiary, they should report the payment on line 130 of their income tax and benefit return in the year in which the payment is received.
There are, however, some instances when the death benefit isn’t taxable.
This will happen when the recipient of the CPP Death Benefit isn’t a beneficiary of the estate, and all the following are true:
- the recipient of the benefit paid the deceased person’s funeral costs.
- the funeral costs were higher than the amount of the death benefit.
- the deceased person has no inheritors, and no property is in the estate.
Frequently Asked Questions
- How much is the CPP death benefit?
- Is the CPP death benefit part of the estate?