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February 2017

Private Health and Dental Insurance Plans: The Federal Government Should Not Go Ahead with The Project To Tax The Premium Paid By Employers

Breaking News: On Wednesday February 1, the federal government announced its intention not to apply this legislative change in its 2017 budget. This could have had a significant impact on private group insurance plans in Canada.

Impact of a possible legislative change

Currently, at the federal level, premiums paid by employers for health and dental insurance do not constitute a taxable benefit to employees. Life insurance, accidental death and dismemberment insurance and critical illness insurance premiums are a taxable benefit to employees. If premiums paid by employers for health and dental insurance ceased to be exempt from federal taxation, employees would be burdened with substantial additional costs and their taxes would increase. Employers could be required to pay additional payroll taxes on contributions paid to the plan because these contributions would become taxable benefits. It should be pointed out that for Quebec employees, health and dental insurance premiums already constitute a taxable benefit at the provincial level. The addition of federal tax would thus further increase their level of taxation.

Where are we at?

Although the federal government should not go ahead with such a change in the spring of 2017, we will remain on the lookout and will keep you informed of any developments.

Please feel free to contact us for additional information.