Finance Minister Jim Flaherty delivered the Federal Budget on March 29, 2012.
In the Budget 2012 the taxability of employer contributions for Group Sickness and Accidental Death and Dismemberment plans are discussed. The Federal Budget 2012 proposes to include the amount of an employer’s contributions to a group sickness or accident insurance plan in an employee’s income for the year in which the contributions are made to the extent that the contributions are not in respect of a wage-loss replacement benefit payable on a periodic basis (long term disability or short term disability plans).
It is understood that the target is accidental death and dismemberment benefits, and critical illness policies. While the benefits under these plans will continue to be non-taxable to the employee when received, the premiums paid by the employer will become a taxable benefit to the employee, similar to employer contributions to term life insurance. Not proposed to be caught by this change are private health services plan benefits such as medical and dental expenses.
Effective March 29, 2012, employer contributions (relating to coverage after 2012) to a group sickness or accident insurance plan will be included in an employee’s income in the year the contributions are made if the contributions. Contributions made between March 29 and December 31, 2012, relating to coverage for 2013, will be included in the employee’s income in 2013.
If you have any further questions or concerns in regards to the above please contact your accountant.