Multi-Employer Benefit Plan Council of Canada
It has come to MEBCO’s attention that the Ontario Ministry of Finance has taken the position that all Employee Life and Health Trusts (ELHTs) should be remitting a 2% Insurance Premium Tax under the Corporations Tax Act (Ontario) (CTA) on all contributions remitted to the trust as they are received, and not when the money is used to pay for benefits.
This is based on a premise that ELHTs are a "Funded Benefit Plan" as defined in the CTA. This means a plan, fund or arrangement (1) that gives protection against risk to an individual that could otherwise be obtained by taking out a contract of insurance, whether the benefits are partly insured or not, and under which the payment of benefits is made directly to or for the benefit of a member of the plan, upon the occurrence of risk and (2) that receives contributions that exceed amounts required for payment of benefits foreseeable and payable within thirty days.
We believe many, if not all, Ontario members of MEBCO administering an ELHT are, in fact, administering a Funded Benefits Plan and very likely have Insurance Premium Tax obligations to consider. Administrators and Trustees of such plans should be aware that the Ministry of Finance has been auditing multi-employer ELHTs and are also levying fines and interest.
We are alerting you to this for information purposes. We suggest that if you are involved in an ELHT you reach out to your legal and/or tax advisor to get advice. You should consider taking action immediately as you may lose your opportunity to avoid penalties and interest that may be imposed if you are audited.
Based on the information currently available to MEBCO, we also believe that in its audits, the Ministry may be failing to account for certain legislated carveouts—such as carveouts for contributions that fund taxable benefits (e.g. STD and LTD benefits) and that fund benefits for plan members who reside outside Ontario. Therefore, we also suggest that you reach out to your legal or tax advisor if you are currently undergoing an audit.
MEBCO is currently looking into consulting with the Province regarding their current audit approach.
MEBCO is also exploring the possibility of advocating for legislative change that would end the application of Insurance Premium Tax to ELHTs.
The expert voice of multi-employer benefit interests in Canada.
Join Today!