Section 11 – Deceased Persons
A death benefit is an amount received from an employer following the death of an individual in recognition of employment services rendered. The beneficiaries are entitled to a total deduction equal to the lesser of the amount received and $10,000.
If you are a shareholder-employee of a private company, consider including a resolution in the minute book specifying payment of a death benefit of $10,000 to your estate following your death.
QPP or CPP Death Benefit
A death benefit paid pursuant to the QPP or CPP (see Section XII) is generally included in the income of the estate for both federal and Quebec purposes. If a trust is not created for tax purposes, it will be included in the income of the beneficiaries in accordance with their respective share of the estate. However, in certain specific cases for federal purposes, the benefit may be paid to another person who must then include it in his/her income.
This document is up to date as of September 3, 2020 and reflects the status of legislation, including proposed amendments at this date.