Update on the Federal Budget: Employer contributions to group accident and sickness and accident insurance plans become taxable benefits to employees
As per the Federal Budget released in March 2012, and the Notice of Ways & Means motion on October 15, 2012, employer contributions to group accident and sickness insurance plans will be a taxable benefit to employees beginning January 1, 2013.
What does this legislation mean?
Contributions paid by employers after March 28, 2012 for group accident and sickness insurance coverage in place on or after January 1, 2013 will be a taxable benefit to employees. According to the Explanatory Notes related to the Notice of Ways & Means, employer contributions paid towards wage loss replacement plans, such as short-term and long-term disability plans are not impacted by this proposed legislation change. However, employer contributions paid towards coverage like accidental death & dismemberment and critical illness insurance are affected.
Sun Life is here to help
Sun Life is modifying the information we send to our plan sponsors in order to make it easier for you to make the necessary changes, when it’s required. These modifications will be in place by January 1, 2013.
Plan sponsors who receive payroll related reports from our administration system will receive a separate communication regarding how this change in legislation will impact the information we provide.
Please contact your Sun Life Financial group benefits representative.