How are disability benefits from a group plan taxed if the employer and employee each pay 50% of the premiums?

Question: How are disability benefits from a group plan taxed if the employer and employee each pay 50% of the premiums?

Answer options:

• The benefits are received completely tax-free. ✅ The benefits are fully taxable to the employee.
• 50% of the benefit received is taxable.
• The benefits are taxable, but the employee can deduct their premium contributions.

Correct answer: The benefits are fully taxable to the employee.

Explanation: Under Canadian tax law for group A&S plans, if the employer pays any portion of the premium, the full benefit amount received by the employee is treated as taxable income.