PST on Insurance Premiums

FAQs – PST on Benefit Plan Premiums

WHY IS PST NOW BEING CHARGED ON MY BENEFIT PLAN PREMIUMS?
On March 22, 2017, the Saskatchewan government announced its budget for the coming year.  Along with many other changes, they announced that PST would be applied to all insurance premiums.  This new tax of 6% has never been charged on insurance  before and covers just about any insurance premium you can think of.  Click HERE for a link to the government’s Information Notice about PST on insurance premiums.

DOES THIS APPLY TO ALL MERIT MEMBERS ACROSS CANADA OR JUST IN SASKATCHEWAN?
Any Merit members conducting work in Saskatchewan should have a Saskatchewan division and report the employees working in Saskatchewan under that division.  All Saskatchewan divisions will see a 6% rate increase effective August 1 as a result of the PST.

DOES THE PST APPLY TO ALL BENEFIT PLANS IN SASKATCHEWAN?
Yes, it does.  So even contractors that don’t belong to Merit will see a 6% increase in all of their premiums, including benefit plans, regardless of where they purchased them.

WILL PST BE CHARGED ON BOTH THE OFFICE/SUPERVISORY AND HOUR BANK PLANS?
Yes, both benefit plans will be subject to the 6% PST.

IS THERE PST ON THE HOUR BANKS ASSOCIATION PARTICIPATION FEE OF $.10 PER HOUR?
Since the $0.10 per hour participation fee that you pay with your Hour Bank premiums is NOT connected with benefit plan administration, it will remain exempt from PST.  

WHAT ARE THE NEW RATES THAT I WILL BE PAYING UNDER THE HOUR BANK PROGRAM?
Below is a detailed breakdown of the new rates with PST added into the total cost

Regular Plan

 

Non-taxable – Employee Paid LTD and Life

Taxable – Employer Paid LTD and Life

Current Rate

PST

New Rate with PST

Current Rate

PST

New Rate with PST

Core Program

.64

.04

.68

.64

.04

.68

Life and AD&D

.14

.01

.15

.14

.01

.15

LTD

.21

.01

.22

.12

.01

.13

Association Fees

.10

0

.10

.10

0

.10

STD (OPTIONAL)

.20

.01

.21

.17

.01

.18

TOTAL

1.09

.06

1.15

1.00

.06

1.06

 

First Nations Plan

 

Non-taxable – Employee Paid LTD and Life

Taxable – Employer Paid LTD and Life

Current Rate

PST

New Rate with PST

Current Rate

PST

New Rate with PST

Core Program

.05

.005

.68

.05

.005

.055

Life and AD&D

.14

.005

.15

.14

.01

.15

LTD

.21

.01

.22

.12

.005

.125

Association Fees

.10

0

.10

.10

0

.10

STD (OPTIONAL)

.20

.01

.21

.17

.01

.18

TOTAL

.50

.02

.52

.41

.02

.43

WHY ARE THERE LTD/STD TAXABLE RATES AND LTD/STD NON-TAXABLE RATES? HOW DO I KNOW WHICH ONE APPLIES TO OUR COMPANY?
If the employee pays 100% of the LTD premiums, the benefit payment will not be taxed as income in the hands of the employee and your premiums would fall under the Non-taxable category  If the employer pays any portion of the LTD premium, disability benefits will be taxed as income to the employee and your premiums would fall under the Taxable category.  Therefore, your rate will depend on your cost-sharing arrangement with employees.  If you aren’t sure of your cost-sharing arrangement, contact Mercon Benefit Services to check.

IF OUR COST SHARE IS 50-50 WITH OUR EMPLOYEES, WILL THEY BE PAYING FOR HALF OF THE PST AFTER AUGUST 1?
Yes, if your company is on a 50-50 share program, then your employees will have to absorb half of the PST.

IS THERE PST ON THE OFFICE PLAN ADMIN FEE OF $12.40 PER EMPLOYEE PER MONTH?  
Since the $12.40 admin fee that you pay with your Office premiums DOES go toward benefit plan administration, that fee will be subject to PST.

HOW DO I FIND OUT WHAT THE NEW RATES FOR THE OFFICE PLAN WILL BE?
Your August billing for the Office/Supervisory program will reflect the increase in premiums for the PST.

WHEN DOES THE INCREASE TAKE EFFECT?  
For any Hour Bank remittances received August 16 or later, new rates will apply.  For the Office Supervisory Plan, your August invoice will include PST, and the PST must be remitted with your payment.

WHEN WILL MY ONLINE REMITTANCE FORM BE UPDATED WITH THE NEW RATES?
The rates included in your online remittance file will change on August 16.  Therefore, any hours submitted after that date will be subject to PST.

IF I REMIT LATE HOURS FOR JUNE, FOR EXAMPLE, WILL I HAVE TO PAY THE PST ON THOSE HOURS EVEN THOUGH THE REPORTING PERIOD IS BEFORE THE PST TAKES EFFECT?
If those hours are submitted on or before August 15, then you will be able to use the old rates.  If you remit these hours on August 16 or later, then you will be paying the new rates.

AM I RESPONSIBLE FOR REPORTING OR REMITTING ANY OF THE PST TO THE GOVERNMENT?
No.  The PST becomes an additional expense to your business operations.  Unlike GST, which is a value added tax, PST is a consumption tax and is simply absorbed by the company as a cost of doing business.

OUR COMPANY PAYS FOR 100% OF THE PREMIUMS.  WHEN I’M PREPARING T4’S AT THE END OF THE YEAR, DO I INCLUDE THE PST THAT WAS PAID ON LIFE AND AD&D BENEFITS?
PST is added to premiums for the Life Insurance and AD&D benefits, regardless of whether they’re a taxable benefit (paid by the employer) or non-taxable benefit (paid by the employee).   If premiums were employer-paid, the amount that the employer must add to the employee’s T4 should include both the premium and the PST. 

IF I HAVE MORE QUESTIONS ABOUT THE NEW PST, WHO SHOULD I CONTACT?
For questions about how PST is applied or why, contact the Ministry of Finance at 1-800-667-6102 or email sask.tax.info@gov.sk.ca

For questions about how the PST is applied to the Merit Contractors Association Benefit Plan call Mercon Benefit Services at 1-877-263-7266 or email mercon@merconbenefits.com

For general inquiries, call the Merit Saskatchewan office at 1-844-637-4848.