Group insurance plans, group term benefits for former employees, remittance deadlines (Ask an expert)

Group insurance plans

Question: Our company has a group insurance plan that covers employees' life insurance, dependant life insurance, accidental death and dismemberment (AD&D), private health insurance (including prescription drugs, health, dental, and vision), short-term disability (STD) and long-term disability (LTD). If the employer pays for the premiums on behalf of the employees to cover the cost of the group insurance plan, does a taxable benefit result and, if so, where is it reported at year end?

Answer: When an employer pays the premiums on behalf of employees for certain types of group insurance benefits, a taxable benefit results, depending on the type of coverage offered.

Federal legislation requires all premiums paid by the employer on behalf of the employee for group term life insurance coverage to be treated as a taxable benefit to the employee. This includes personal coverage as well as dependant coverage. In addition, employer-paid premiums for group sickness and accidental death and dismemberment coverage are taxable benefits to employees. Any employer-paid premiums for private health insurance, STD or LTD offered under a group plan are not taxable benefits to the employee.

Quebec provincial legislation also requires all premiums paid by the employer on behalf of the employee for group term life insurance coverage to be treated as a taxable benefit to the employee. In addition, employer-paid premiums for AD&D and private health insurance are also considered taxable benefits. STD and LTD offered under a group plan are not taxable for Quebec employees.

For year-end reporting, the taxable benefit is reported on the T4 in box (14) and in the “Other Information” area, using code (40).

For Quebec, report the taxable benefit resulting from group term life insurance and AD&D coverage in boxes (A) and (L) on an RL-1. The taxable benefit for private health insurance coverage is reported in boxes (A) and (J).

Reporting group term life benefits for former employees

Question: For year-end reporting purposes, where do I report the group term life insurance taxable benefit for former employees (such as retirees)?

Answer: Where an employer continues to provide group term life insurance for retirees after their employment (for example, the employee-employer relationship no longer exists), the taxable benefit would be reported in the “Other Information” area of a T4A, using code 119. In the adjacent box, enter the amount of the benefit. Report the benefit for retirees even if the total amount of all benefits paid in the calendar year is $500 or less.

For Quebec retirees, the benefit is reported in boxes (A) and (L) on the RL-1. Enter “0” in box (G).

Payment deadlines for threshold 2 remitters

Question: What are the remittance due dates for 2013 for threshold 2 remitters?

Answer: The following table sets out the 2013 remitting schedule for threshold two remitters. While the best efforts have been made to ensure this table is accurate, in some jurisdictions remittance due dates may vary because of civic holidays. The holidays used for this table come from s. 35(1) of the federal Interpretation Act, which defines a holiday as including: Sundays, New Year's Day, Good Friday, Easter Monday, Christmas Day, Victoria Day, Canada Day, Labour Day, Remembrance Day, and Thanksgiving, as well as any day proclaimed or appointed by federal, provincial, or civic authorities as a holiday. Readers should check with their financial institution for specific bank closing dates.

Remittance Reminders

For 2013, threshold two remitters are employers whose average monthly withholding in the 2011 calendar year was $50,000 or more.

Employers have the option of changing their remitting frequency based on their average monthly withholding amount in the previous year .

Amounts that threshold two remitters deduct or withhold from remuneration paid any time during the month are due three working days (discluding Saturdays, Sundays, or holidays) from the last day in the following periods: 1st to 7th, 8th to 14th, 15th to 21st, and the 22nd to the end of the month.

Annie Chong is manager of the payroll consulting group at Carswell, a Thomson Reuters business, which publishes the Canadian Payroll Manual and operates the Carswell Payroll Hotline. She can be reached at [email protected] or (416) 298-5085.