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|
|Extended Health Care 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|
|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.
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.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.