Direct Tax on Employee Benefits
The federal government charges 5% GST/HST on benefit administration fees and provincial governments add their share of the HST, as well as retail sales tax (RST) and provincial premium tax (PPT).
Provincial Premium Tax (PPT)
Provinces and territories charge a premium tax on employee benefit insurance premiums and related fees. Ontario, Quebec and Newfoundland also charge the tax on uninsured arrangements whether they are professionally administered as Administrative Services Only (ASO) as well as self-administered benefits.
|Rate||Jurisdiction||Insured Plans||Uninsured Plans|
|3.5%||Prince Edward Island||Yes||No|
North West Territories,
|2%||All other jurisdictions||Yes||No|
Provincial Retail Sales Tax (PST/RST)
Some provinces continue to charge retail sales tax on employee benefits even after introducing Harmonized Sales Tax.
|8%||Ontario||group life and health benefits, including Provincial Premium Tax (PPT)
if the PPT forms part of the premium billed by an insurer.
|9%||Quebec||group life and health benefits|
|8%||Manitoba||group life & disability insurance benefits|
|6%||Saskatchewan||group life & health benefits as well as taxable spending accounts|
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 primary location of the employer and the provinces with HST add their portion.
|14%||HST||Prince Edward Island|
|13%||HST||Ontario, New Brunswick, Newfoundland and Labrador|
|5%||GST||All other jurisdictions|