The Saskatchewan government is announcing a one percent increase to the provincial sales tax (PST) along with a number of other tax changes in their 2017-2018 budget. This change will affect your personal income and businesses. The Saskatchewan tax changes affect your insurance premiums as well.
Officially effective March 23, 2017, the new Saskatchewan tax changes affect your insurance premiums as of July 1st, 2017. Whereas previously insurance premium payments were exempt from the provincial sales tax.
The new tax increase will apply to insurance premiums for all life, accident and health insurance. This also includes property, vehicle, liability, casualty and agriculture insurance. You can expect to pay a 6% tax on top of your insurance premiums moving forward. In addition to insurance, this new tax will also apply to children’s clothing, restaurant meals and construction services. For a full list of tax changes in other areas, check out this article.
The Saskatchewan government is also reducing taxes for personal and corporate income in addition to the increase in taxes for goods and services. Personal income tax rates will be reduced by a half-point on July 1st, 2017, and again on July 1st, 2018. This is expected to save tax payers $82.2 million in 2017-18. This decrease also applies to Saskatchewan businesses, resulting in expected savings of $25.3 million.
Why are all these changes necessary? The Saskatchewan government is currently spending $14.8 billion annually, leaving a $685 million dollar deficit. This is how the government spending will break down in the three major ministries moving forward:
- $5.6 billion on Health care – receiving a $39 million increase
- $3.64 billion on Education – $45 million decrease
- $1.36 billion on Social Services – receiving a $113 million increase
Tax revenue from insurance premiums alone is expected to raise an estimated $157.9 million towards the deficit. The government expects the new tax changes to eliminate the deficit in three years. The expectation is for a $15 million surplus in 2019/20 and a $183 million surplus in the 2020/21 fiscal year. The goal is to reduce the provinces reliance on resource-based revenue (oil, potash, etc.), which has taken a major hit in the recent past.
If you are a resident of this province and are concerned about how the Saskatchewan tax changes affect your insurance premiums, we encourage you to talk to a representative at DENT Benefits. We stay on top of all regulatory changes to make sure our clients are prepared.
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.