On March 29, 2012 the Federal Government announced that employer-paid premiums for Accidental Death & Dismemberment (AD&D) and Critical Illness (CI) will become taxable benefits.
Currently, the premiums paid by employers for AD&D and CI are non-taxable benefits to the employee.
However, as of January 2013, premiums paid by the employer will be taxable to the employee.
What does this mean?
- Effective January 1, 2013, if AD&D and CI premiums ARE paid by employers, the premium must be added to the employee’s pay as income on each paycheque.
- Payroll systems will need to be revised to accommodate this change in tax legislation.
- Since each employer has their own employee/employer cost sharing formula, employers will need to review the formula and ensure it complies. Please contact us if you have any questions.
Private Extended Health (including prescription drugs) and Dental plans will remain a non-taxable benefit for income tax purposes for all Provinces (except Quebec). This means that employees do not pay tax on the employer-paid premiums as per their payroll deductions.
Please contact ENCOMPASS Benefits & HR Solutions.
- Bookmark on Delicious
- Digg this post
- Recommend on Facebook
- Share on Linkedin
- share via Reddit
- Share with Stumblers
- Tweet about it
- Tell a friend