Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Is the employee in receipt of a taxable benefit when the Employer pays the Ontario Health Premium?
Position: Yes.
Reasons: In accordance with 6(1)(a) of the ITA, taxpayers are generally taxable on the value of all benefits they receive by virtue of their employment. This includes amounts that are premiums paid by the employer that the employee would normally have to bear.
XXXXXXXXXX 2006-018175
August 25, 2006
Dear XXXXXXXXXX:
Re: Technical Interpretation Request - Ontario Health Premium
This is in reply to your correspondence of April 10, 2006, requesting our comments on whether the payment of the Ontario Health Premium by an employer would be subject to income tax deductions, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums.
Paragraph 6(1)(a) of the Income Tax Act (hereinafter "the Act") stipulates that the value of benefits received by an employee in the course of employment is to be included in the computation of the employee's income. Except where the Act provides otherwise, employees are generally taxable on the value of all benefits they receive by virtue of their employment.
The Ontario Health Premium is described as a "tax on individuals under the Ontario Income Tax Act" (see http://www.fin.gov.on.ca/english/publications/
healthpremium/healthfaqemp.html#answer3). We are of the opinion that any payments by an employer on an employee's behalf related to the premium would constitute a taxable benefit pursuant to paragraph 6(1)(a) of the Act. Like most taxable benefits, the amounts would also be subject to EI and CPP.
We trust this information is helpful.
Yours truly,
Randy Hewlett
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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