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Taxation

Taxation

A taxable benefit is an amount that the employer pays on the employee's behalf and which the different levels of government consider as salary. The employee is therefore required to pay tax on this amount.

taxable benefits

PROVINCIAL PREMIUM TAX (PPT)

  • Insurance Tax, more commonly referred to as Premium Tax, is applicable to every insurance company in Canada.
  • The tax is built into the premium, or charged on plan costs for self-insured plans.
  • The rate varies by province and currently range between 2% and 4%.
  • 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.

* 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)

  • Retail Sales Tax (RST), also referred to as Provincial Sales Tax (PST), is only applicable in Ontario and Quebec.
  • The tax is charged on the premium, or plan costs, on all plans regardless of whether they are insured or self-insured.
  • 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.