Is the CPP death benefit taxable?
Yes, by the person or estate who receives it.
If an estate receives the death benefit, the amount is included in the estate’s taxable income on line 19 of the trust’s T3 income tax and information return in the year the payment is received.
If a beneficiary (person) receives the death benefit, they’ll have to include the amount on their income tax and benefit return on line 130 in the year the payment is received.
It’s doubtful the death benefit will be taxed if the recipient isn’t a beneficiary of the estate and these situations apply:
- The taxpayer who received the death benefit paid the deceased’s funeral expenses
- The death benefit amount isn’t more than the funeral expenses
- The deceased has no heirs and there is no other property in the estate
