Group Benefits + Taxes

A quick overview on how group benefits interact with income and sales taxes.

Income Tax

The below chart outlines the treatment of benefits in relation to income taxes.

 

* Yes for Quebec

** This is determined by who is paying the premium. If the entire disability premium is paid by the employer, the benefit is taxable. If the entire disability premium is paid by the employee, the benefit is non-taxable. If the costs of the disability premium are shared between employer and employee, a portion of the benefit will be taxed according to the split. See: Talking to Employees about Disability Premiums for more.


Sales Tax

Harmonized Sales Tax (HST)

Charged by the federal government on the administration fees for ASO plans.

Provincial Premium Tax (PPT)

Ontario: 2% on the cost of group life and health benefits. *

Alberta: 3% on the cost of group life and health benefits.

Quebec: 3.3% on the cost of group life and health benefits. *

Newfoundland and Labrador: 5%  on funded life and health benefits.

Nova Scotia: 4% on funded life and health benefits.

Provincial Premium Tax (PPT) is also charged on the PPT if it forms part of the premium billed by an insurer.

Provincial Retail Sales Tax (RST)

Ontario: 8% on group life and health benefits.*

Quebec: 9% on group life and health benefits.

Retail Sales Tax is also charged on the Provincial Premium Tax if it forms part of the premium billed by an insurer.

IMPORTANT NOTE: This article is for informational purposes only, for detailed tax information or advice please consult a tax professional.

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