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Proposed Taxation of Health and Dental Benefit Plans

Employer-paid health and dental plans are currently a non-taxable employee benefit. This helps to keep your coverage affordable for you and your employer. If the federal government decides to tax these benefits, affordable access to health care would be jeopardized as group plans become less affordable.
What are the risks?
  • benefit reductions: after a 1990’s decision to tax employer-paid benefits in Quebec, 20% of employers cancelled their coverage;
  • federal and provincial income taxes payable by members could increase;
  • Canadian families employed outside of Quebec could pay up to $1,200 more in annual taxes;
  • higher payroll administration changes for employers, and less take-home pay for employees;
  • increases to Canadian Pension Plan (CPP) and Employment Insurance (EI) contributions.

BENEFITEMPLOYER CONTRIBUTIONSBENEFIT PAYMENTS
Group Life, AD&D, Dependent Life, Critical Illness InsuranceTaxable benefits to the employeeBenefit payments are not taxed
Short Term Disability, Long Term DisabilityNot taxable to the employeeBenefit payment is taxable as income unless employee pays 100% of the premium
Extended Health and DentalNot taxable to the employee, except in QuebecBenefit payments are not taxable

Have your say about the impacts of this proposed tax at donttaxmyhealthbenefits.ca.

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