July 2021 – 15 min read
The Canada Pension Plan (CPP) death benefit is a one-time, lump-sum payment to the estate on behalf of a deceased CPP contributor. The Quebec Pension Plan (QPP) is similar, but for Quebec residents.
If an estate exists, the executor named in the will or whomever the Court names to administer the estate applies for the death benefit. The executor should apply for the benefit within 60 days of the date of death. If no estate exists or the executor hasn’t applied for the death benefit, others may apply for the benefit in this order:
- The person or institution that’s paid for or is responsible for paying for the deceased’s funeral expenses
- The deceased’s surviving spouse or common-law partner
- The deceased’s next-of-kin
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
Payment takes 6 to 12 weeks from the time Service Canada receives your completed application. These are the CPP payment datesOpens a new website in a new window:
- 10 calendar years
- One-third of the calendar years in their contributory period for the base CPP, but no less than 3 calendar years
To apply for the CPP, you must complete the Application for a Canada Pension Plan Death Benefit (ISP1200)Opens a new website in a new window, with the required documents, and send to Service Canada. To apply for the QPP, you must complete the Application for Survivors’ Benefits Under the Quebec Pension PlanOpens a new website in a new window.
Now that you know more about the CPP/QPP death benefit, you may want to contact your financial advisor:
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.