Group
Benefit Taxation
The following
table illustrates the income tax treatment of employee benefits.
| 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 |
No |
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 |
*
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.
Federal
Goods and Services Tax (GST)
The federal government charges 7% 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.1
Quebec
charges 2.35% Provincial Premium Tax on the cost of group
life and health benefits.1
Nova Scotia
and Newfoundland charge 4% Provincial Premium Tax on funded
life and health benefits.1
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 charges 8% Retail Sales Tax on group life and health
benefits.2 Quebec charges 9% Retail Sales Tax on group life
and health benefits. 2Retail 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.
THE
NEXT STEP IS YOURS. TAKE THE FIRST STEP ON THE RIGHT
PATH.
CALL US
TODAY!
