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Friday, August 01st 2014

The following table (below) illustrates the income tax treatment of employee benefits:

* Yes for Quebec

** Yes, if any part of the short-term or long-term disability premium is paid by the employer. No, if the entire short-term or long-term disability premium is paid by the employee. Where the costs of the short-term or long-term disability plan are shared between employer and employee, the employee is entitled to receive benefits equal to his/her contributions on a non-taxable basis.

The federal government charges 6% GST on the administration charges for benefits.

Provincial Premium Tax (PPT)
Ontario charges 2% Provincial Premium Tax on the cost of group life and health benefits.

Quebec charges 2.35% Provincial Premium Tax on the cost of group life and health benefits.

Nova Scotia and Newfoundland charge 4% Provincial Premium Tax on funded life and health benefits.

1Provincial 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 charges 8% Retail Sales Tax on group life and health benefits. Quebec charges 9% Retail Sales Tax 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.

Provincial Income Tax
The employer portion of health and dental premiums is included in the tax base for Quebec.

 

Benefit Cost Tax Deductible to Employer? Employer Contributions Taxable to Employee? Employee Contributions Eligible for Tax Deductions or Credit? Benefit Taxable When Received?

Accidental Death & Dismemberment

Yes No* No No
Group Life Insurance Yes Yes No No
Short-Term Disability Yes No No Yes/No**
Long-Term Disability Yes No No Yes/No**

Extended Health Care Plan

Yes No* Yes No
Dental Plan Yes No* Yes No
Employee Assistance Plan Yes No No No
Registered Pension Plan Yes No Yes Yes
Registered Retirement Savings Plan N/A N/A Yes Yes
Deferred Profit-Sharing Plan Yes No N/A Yes
Canada/Quebec Pension Plan Yes No Yes Yes
Retirement Compensation Arrangement Yes No Yes Yes
WSIB Benefits Yes No N/A No
Employment Insurance Yes No Yes Yes
Provincial Health Plan Yes Yes No No

     


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BENEFITS MANAGEMENT GROUP INC. | Stouffville, Ontario
Telephone: 905.640.1344 | Toll-Free: 1.866.540.1344 | Fax: 905.640.9535 | Email: info@benefitsmgmt.ca