This past week Québec’s Minister of Finance Carlos Leitão gave an update on the province’s economic and financial situation, and revealed that one of the measures to balance the budget would be an increase on insurance premium taxes from 2% to 3% on December 3, 2014.
These changes apply to taxation years ending after December 2, 2014. For taxation years after this date the new rate is applied proportionally to the remaining days in the taxation years. Your Accompass consultant can give you more details.
The update also increases the temporary contribution relative to the compensation tax for financial institutions. From December 3, 2014 to March 31, 2017 the tax for insurance premiums increases to 0.48% from 0.30%. The effective tax rate on net premiums is 3.48%.
Premium tax is built into the rates charged under insured benefit plans so plan sponsors with an insured plan will not see an immediate impact. Plans that are self-funded for Health/Dental will see their insurer start charging higher Québec premium taxes on the next billing.
Please contact your Accompass consultant at 416-969-8588 for additional details, the insurance companies will ensure that these changes are captured for you.