Saskatchewan budget: New tax on insurance premiums
Changes to Saskatchewan’s provincial sales tax (PST) were announced in the recent 2017 budget. As of March 23, 2017, the PST increased from 5% to 6% and effective July 1, 2017, the PST will be charged on all insurance premiums as defined in The Saskatchewan Insurance Act.
The change applies to premium payments due on or after July 1, 2017 for life, accident and health insurance policies, which includes most insurance premiums for group plans. PST will not apply on reinsurance, self-insurance, annuity contracts, contributions or premiums paid for the Canada Pension Plan, Employment Insurance or Workers’ Compensation. This change affects employers with employees in Saskatchewan, even if the organization is headquartered in another province. Further guidance regarding the change is expected from the government in April 2017.
Premium taxes vary provincially so it is important to have correct information regarding employees’ province of residence when administering benefits.
The government also announced changes to provincially funded programs and coverage for hearing aids, podiatry services, chiropractic services, and orthotics. These changes may have an impact on plan sponsors and should be considered in light of coverage provided by private plans.