Taxation of Employee Benefit Costs
The federal government charges G/HST on the administration charge for benefits and some provincial governments charge retail sales tax and premium tax on cost of health benefits.
Provincial Premium Tax (PPT)
Tax Base
- Cost of insured benefits for all jurisdictions (premiums, fees and taxes that form part of the premium).
- Cost of uninsured arrangements such as Administrative Services Only (ASO) in Ontario and Quebec.
Tax Rates
|
Tax Rate |
Jurisdiction |
Applicable if Uninsured |
|---|---|---|
|
4% |
Newfoundland & Nova Scotia |
No |
|
3.5% |
Prince Edward Island |
No |
|
3% |
Saskatchewan and North West Territories |
No |
|
2.55% |
Quebec |
Yes |
|
2% |
Ontario |
Yes |
|
2% |
all other jurisdictions |
No |
Provincial Retail Sales Tax (RST)
- Ontario charges 8% Retail Sales Tax on group life and health benefits, including Provincial Premium Tax (PPT) if the PPT forms part of the premium billed by an insurer.
- Quebec charges 9% Retail Sales Tax on group life and health benefits plus 8.5% Quebec Sales Tax on administration fees and GST for uninsured benefits.
Federal Goods and Services Tax (GST) / Harmonized Sales Tax (HST)
The federal government charges 5% GST or HST on the administration charges for benefits based on the location of the employer.
|
Tax Rate |
Jurisdiction |
Tax |
|---|---|---|
|
15% |
Nova Scotia |
HST |
|
13% |
Ontario, New Brunswick, Newfoundland and Labrador |
HST |
|
12% |
British Columbia |
HST |
|
14.975% |
Quebec |
5% GST + 8.5% QST |
|
5% |
all other jurisdictions |
GST |