Originally from our sister publication, SmallBizAdvisor.ca.
The 7% provincial retail sales tax (RST) announced in the Manitoba government’s budget tabled in April 2012 will apply to group life insurance premiums, says a Mercer Communique.
The RST is to apply to all forms of group life insurance premiums: employee life, survivor income benefit, optional life, paid-up life, dependent life and creditor life insurance.
Any consulting, placement, administration or service fees which are charged in addition to group life insurance premiums, will also be taxable. However, financing fees will not be taxable.
The RST will apply only to employees who reside in Manitoba. Where the group consists of Manitoba residents and non-Manitoba residents, the tax will only apply to the portion related to Manitoba residents.
The tax will not apply to group health, dental, accidental death and dismemberment or disability insurance plans. It also will not apply to self-insured plans or individual life insurance contracts.
Taxable group life insurance premiums must be segregated from non-taxable premiums on premium statements or invoices for the application of RST. If not, RST will be chargeable on all premiums.
Any employer paid share of the RST on group life insurance premiums is a taxable benefit to employees.
The proposed effective date was July 1, 2012. However, in response to industry requests, the government has delayed the effective date so that RST will apply to group life premiums payable after July 14, 2012. Group insurance premiums are typically due and payable on the first of a month. In most cases, therefore, the tax is effectively applicable to premiums starting on August 1, 2012.