This blog has been written by Sandra Arsenault, Law Clerk at Fasken LLP.

On January 1, 2025, amendments to the Canada Pension Plan (CPP) Death Benefit came into effect, introducing a top-up for eligible deceased individuals. While this reform is long-overdue, the net benefit overall for most individuals still fails to cover the costs of even the most basic death expenses in 2025. The majority of Canadians will continue to receive the flat rate amount of $2,500, a cap determined 27 years ago in 1998.

For those who qualify, an additional $2,500 top-up will now be added to the basic $2,500 benefit, resulting in a total benefit of $5,000.

To qualify for the top-up, the deceased CPP contributor must meet existing eligibility requirements and: (a) have died on or after January 1, 2025, (b) not have claimed a retirement or disability pension during their lifetime, and (c) not have a spouse or common-law partner.[1]

Both the CPP Death Benefit and the top-up are not automatically paid. An executor of the estate must apply within the first 60 days of death. If no estate exists or the executor does not apply, the priority of eligible applicants is as follows:

1. 1. the person or institution responsible for paying the funeral expenses of the deceased;
   2. the surviving spouse or common-law partner of the deceased (in which case the top-up is not available); or
   3. the next-of-kin of the deceased.[2]

Applications can be completed online through your My Service Canada Account (MSCA), by delivering form ISP-1200 to a Service Canada office (SCO), or by mail.

While the base death benefit remains the same as it was 27 years ago, the cost of living continues to rise and the cost of dying is no exception. In the past year, the average cost of a funeral in Canada ranged from $5,000 to $25,000 with the most basic cremation costs starting at approximately $2,000,[3] all subject to HST if paid post-death. The CPP Death Benefit and the top-up (if applicable) are both taxable benefits. The amount must be reported in a T3 Trust Income Tax Return or claimed as income by the beneficiary in a personal T1 Tax Return.^[4] After administrative costs, including preparing and filing tax returns and after paying taxes, the remaining benefit amount is not enough to cover the most basic costs of a death in Canada.

At the end of the day—or in this case, at the end of life—for Canadians already struggling with the cost of living, how are they expected to afford the cost of dying?

[1] Death Benefit – Canada.ca

[2] Death Benefit – Canada.ca

[3] How Much Does A Funeral Cost? | Sun Life Canada

[4] Death benefits – Prepare tax returns for someone who died – Canada.ca