Death Benefits

Death benefits are amounts paid to the heirs of a deceased employee, in recognition of services rendered by the employee. Such a benefit may be, for example, an amount refunded for sick leave accumulated but not used before the employee's death.

Source deductions of income tax

If you pay a death benefit, you must withhold income tax of 16% or 20% on the taxable portion of the payment (that is, the amount of the benefit minus, where applicable, a maximum exemption of $10,000) only if the benefit is paid in the year of death or the following year.

The beneficiary or beneficiaries of a death benefit will generally be entitled to the $10,000 exemption when filing their income tax return.

Note
Death benefits are not amounts paid after the death of an employee. For more information about those amounts, click Deceased Employee. Note that death benefits, which are paid by employers, are not to be confused with the death benefit paid by Retraite Québec.
Last Updated: