Saskatchewan eliminates provincial sales tax on insurance premiums
The province of Saskatchewan announced that provincial sales tax (PST) no longer applies to insurance premiums. The change is effective February 26, 2018, but also extends retroactively to August 1, 2017, the date the change previously came into effect. This change affects employers with employees in Saskatchewan, even if the organization is headquartered in another province.
The government has stated that information regarding refunds of PST paid on insurance premiums will be provided in April 2018 following consultation with the insurance industry.
As reported in our News & Views bulletin in April 2017 and June 2017, the 2017 provincial budget included a change to apply the PST to all insurance premiums as defined in the Saskatchewan Insurance Act as well as an increase in the PST from 5% to 6%. Following consultations with the insurance industry, the effective date for PST being applied to insurance premiums was delayed from July 1, 2017 to August 1, 2017.
This change will create unexpected savings for plan sponsors, especially with the change being retroactive. This may create some additional administrative complexity for an interim period, as systems will need to be updated.