With tax-season in full-swing, employers and employees across Canada are submitting their taxes, looking for every possible tax deduction.
The Canada Revenue Agency (CRA) determines what can and can’t be taxable, and with the constant changes, it can be challenging to decide what can be submitted as a deduction.
You may have some valuable company perks, such as a cell phone, tuition reimbursement or service awards. But these may not provide any tax benefits. Group health benefits, on the other hand, are a different story.
Defining Group Health Benefits
Group health benefits can encompass a wide range of services and products, commonly including:
- Wellness Spending Accounts, such as gym memberships
- Health Spending Accounts, such as funds for physiotherapy
- Dental insurance across Canada
- Vision care
- Retirement benefits, such as RSSP submissions
- Life and disability insurance
There can be many other additional services that can be covered through group health insurance. It all varies on the type of coverage employers provide employees. As such, the taxable benefits also vary.
What Group Benefits Are Taxable In Canada?
Determining what is taxable can be tricky for both employers and workers.
For employees, in general, employer-paid premiums for group life insurance (for both employees and dependents), accident insurance and critical illness insurance are considered taxable benefits. This can be applied at both a provincial and federal level.
However, it should be noted that short and long-term disability insurance is not considered as a taxable benefit at either the provincial or federal level. Even if the coverage is paid by the employer, short and long-term disability insurance does not count as a taxable benefit.
Any contribution to an employee RRSP, as well as any related administrative fees, are taxable. However, that same employer contribution made to a Pension Plan or Deferred Profit Sharing Plan (DPSP) is not considered a taxable benefit for employees.
As for employers, the premiums for group health insurance count as business expenses and, therefore, the premiums you pay on your employees’ behalf are not considered to be a taxable benefit.
Overall, it can be quite confusing to determine what is taxable and what isn’t. To avoid confusion, make sure you speak to your group health insurance provider for more information. Only then will you have a full understanding of what to expect come tax time.
Perlinger Group Benefits has been offering exceptional group benefit plans since 1992. Our goal is to provide the best group health insurance plans to meet your business’ needs, regardless of the size of your business. We make it affordable and easy to get access to comprehensive benefits plans. Contact us today: Direct Line 403-217-5560 | Toll-Free 1-877-217-7829 | Email [email protected].