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23.01.2017 09:47    Comments: 0    Categories: Community      Tags: taxing health benefit plans  

Why is this an urgent issue that matters?

If this new tax is introduced with the upcoming 2017 Federal Budget, the premiums your organization pays into employer health benefits plans (including coverage for employees’ pharmaceutical expenses, dental care, vision/eye care, mental health care, physiotherapy, and other related health benefits) would cease to be exempt from federal taxation – costing Canadians billions of dollars.


We are deeply concerned that if implemented, this measure would harm millions of working, middle-class and lower-income Canadians and their families who rely on these plans to sustain their health, resulting in both a significant impact on their take-home pay and possibly a reduction of their supplemental health care coverage. Private benefits plans covers nearly $30 billion annually in health care costs for up to 22 million Canadians and their families accounting for nearly a third of the health-related spending nationally.

The measure would also negatively impact the many responsible employers like you, who rely on health benefit plans to maintain a healthy work place, enhance the productivity and well being of employees, and attract and retain the people needed for innovation and growth.


What are the potential direct and indirect costs to your organization and your employees?

Your organization would be required to make changes to its administrative practices since contributions towards group health benefits plans would become taxable income to your employees. Such changes could result in consideration of plan changes.

This tax would negate the income tax break that the Government of Canada provided to middle-class families beginning in 2016. We estimate it could increase the tax burden of working families by approximately $1,300 per annum, thereby mostly or completely offsetting up to $680 in income tax relief for middle income earners. Such a change is completely misaligned with the stated objectives of the new Government's goals to help middle and working class families.

The snowball effects of such changes could introduce new costs and place added pressure on your HR resources, as many plan members faced with the difficult decision of possibly reducing their plan coverage or opting out entirely would seek your internal guidance.

In addition, attracting and retaining talent could become a challenge in this competitive workforce since attractive and tax-beneficial group health benefits plans can be viewed as an important element of an employee’s total compensation package. This would also diminish the perceived value of the programs employers offer to their employees if they’re suddenly required to include employer contributions as a taxable benefit, when currently they are tax free.





The Federal Government is considering taxing employer contributions made to your group health and dental benefit plans. If this plan is announced in the 2017 federal budget, it means employer contributions made to your group health and dental benefits will be considered taxable income, potentially adding thousands of dollars to your tax bill.

If you want your employer's contributions to your group health and dental benefits coverage to continue to be tax-free, we encourage you to voice your concern right now. Visit and in just a few clicks you can send a letter to your MP and the Minister of Finance.



In the meantime, we will continue advocate against this proposed new tax as well as monitor developments to keep you informed.


Joe Carter

Chamber of Commerce Group Plan / Sunlife Financial

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