Taxation of health benefits unpopular with experts

Implementation could have had ‘very disruptive effect’: Lawyer
By Marcel Vander Wier
|Canadian HR Reporter|Last Updated: 02/21/2017

Late last year, as part of a comprehensive review of the tax system, the federal government said it was considering taxing private health and dental plans across Canada. But the proposition had lawyers and industry experts waving caution flags.

The move would have had “significant ramifications” for workers, said Sheryl Smolkin, a Toronto-based lawyer and journalist.

“It’s a bad idea,” she said. “(Benefit plans) are a way that employers can provide additional compensation to employees on a tax-effective basis… Once they become a taxable benefit, it’s not as valuable in the employees’ hands. If employers say they’d be less inclined to make benefit plans available, at the end of the day, they could end up with sicker employees and they would lose a valuable compensation tool.”