|
1
|
PURPOSE
|
|
1.1
|
The purpose of this directive is to advise you of the implementation of the
Ontario Sales tax (8%) which is to be levied on federal government employees'
group insurance plan premiums.
|
|
2
|
BACKGROUND
|
|
2.1
|
On May 19, 1993, the Ontario Government introduced in their budget speech a new
retail sales tax, effective July 1, 1993, which applies to group insurance
premiums.
|
|
3
|
POLICY
|
|
3.1
|
The sales tax is to be paid by any person who resides in Ontario and who pays a
premium in respect of an employer sponsored group insurance
plan.
|
|
3.2
|
The Federal Government plans affected are the Public Service Health Care Plan,
the Disability and Long Term Disability Insurance Plans, the Supplementary
Death Benefit Plan and the Public Service Management Insurance
Plan.
|
|
3.3
|
The sales tax is also applied to the Dental Care Plan for those employees on
leave without pay who are required to pay the full cost of the
premium.
|
|
3.4
|
The retail sales tax on any insurance plans that are not employer sponsored
will not be calculated at source. Underwriters of the plans will make their own
arrangements to collect and remit the tax.
|
|
3.5
|
Employees who are residents of Ontario and are working outside Canada are not
subject to the sales tax.
|
|
4
|
PROCEDURES / INSTRUCTIONS
|
|
4.1
|
The Ontario Retail Sales Tax will be automatically calculated by the pay system
and deducted starting with the first pay of February 1994.
|
|
4.2
|
The sales tax will be reported as a separate deduction under new code 936 and
will appear on the bottom portion of the employee's payment
stub.
|
|
4.3
|
As the sales tax is retroactive to July 1, 1993, a lump sum arrears adjustment
for the period July 1993 to January 1994 inclusive will be automatically
calculated and collected from the first pay in March 1994. This is a one time
adjustment and will be collected under deduction code 947.
|
|
4.4
|
Employees on leave without pay who are paying premiums in advance for the
Dental Care Plan, the Public Service Health Care Plan or the Disability/Long
Term Disability Plans, are to include the sales tax in their payment effective
February 1, 1994. Departments must calculate the sales tax and advise the
employee of the total amount of the tax end insurance premium. The sales tax
can be included in the advance premium payment but should be reported as a
separate deduction as per the instructions contained in PPIM
4-4-20.
|
|
5
|
INQUIRIES
|
|
5.1
|
Any inquiries on the foregoing may be addressed to the Compensation Advisory
Division, Debby Plumb at (819) 956-1970 or Diane Perrier at (819)
956-2094.
|
P. Charko
Director General
Compensation Sector
Government Operational Service Branch
[Print Version]