• Group Sickness or Accident Insurance Plans
  • April 2, 2012
  • Law Firm: Miller Thomson LLP - Toronto Office
  • Currently, wage-loss replacement benefits payable on a periodic basis under a group sickness or accident insurance plan to which an employer has contributed are included in an employee’s income for tax purposes when those benefits are received. However, no amount is included in an employee’s income, either when the employer contributions are made or the benefits are received, to the extent that:

    • benefits are not payable on a periodic basis; or

    • benefits are payable in respect of a sickness or accident when there is no loss of employment income.

    To provide for more neutral and fair tax treatment of beneficiaries under a group sickness or accident insurance plan, the Budget 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.

    This measure will not affect the tax treatment of private health services plans or other plans described in paragraph 6(1)(a) of the Tax Act.

    This measure will apply in respect of employer contributions made on or after Budget Day to the extent that the contributions relate to coverage after 2012, except that such contributions made on or after Budget Day and before 2013 will be included in the employee’s income for 2013.