What death benefits does Veterans Affairs Canada pay?
VAC pays a tax-free lump-sum death benefit to the survivor and dependent children when a member dies from a service-related cause, and may pay ongoing survivor income support through the Income Replacement Benefit.
How much is the VAC death benefit?
The death benefit is a one-time lump sum up to a current-year maximum of about $444,940 for a service-related death. Partial amounts apply where the death is only partly attributable to service.
Is the VAC death benefit taxable?
No. The lump-sum death benefit is tax-free. Ongoing survivor income support through the Income Replacement Benefit, however, is taxable because it replaces income.
How does the Canadian death benefit differ from US DIC?
The US pays surviving spouses a monthly DIC amount for life. Canada instead combines a large tax-free lump-sum death benefit with separate monthly survivor income support, so the structure is quite different.