In 2017, Saskatchewan business owners were dismayed to learn the provincial government was going to levy the provincial sales tax (PST) on insurance premiums. Which meant employers would see their insurance premiums rise by six per cent under the new tax. This new tax was announced in the 2017/2018 budget and took place on August 1st, 2017. Thankfully, Saskatchewan has reversed the provincial sales tax on insurance premiums effective February 26th, 2018.
At the time of the announcement last year, the Saskatchewan provincial government placed pressure from business owner and insurance associations to immediately reverse the decision. The Canadian Life and Health Insurance Association (CLHIA) was quoted as saying: “CLHIA believes that Saskatchewan’s imposition of sales tax on insurance products is not good public policy and should be immediately reversed.”
The obvious problem with the imposition of such a tax is it discourages employers from providing employees and their families with supplementary health benefits. The provincial health plan does not cover many commonly used health and dental services that many employees rely on. As a result, employees may have reduced protection and delay health care needs due to the cost, which means higher health care costs in the long term. It was estimated that taxing insurance premiums will increase consumers’ reliance on public health and social services, costing the government more than they would gain from the tax revenue.
Saskatchewan has reversed the provincial sales tax on insurance premiums moving forward, but the exemption is also extended retroactively to August 1st, 2017, when the tax was instated. This means that businesses who paid the tax are entitled to a refund in the future, the refund process has not been finalized as of today.
Which insurance products were affected? The following products will no longer be subject to PST on insurance premiums:
- Life Insurance
- Accidental Death & Dismemberment
- Critical Illness
- Weekly Indemnity (Short Term Disability)
- Long Term Disability
- Extended Health
- Health Care Spending Account
DENT Benefits is happy Saskatchewan has reversed the provincial sales tax on insurance premiums. Penalizing business owners for providing group benefit plans could increase health care costs in the long-term.
DENT Benefits stay on top of all regulatory changes in order to provide our Saskatchewan clients with effective advice on employee benefits, life insurance and group retirement plans. Contact us today for a free consultation!
The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.