28 June 2011 External T.I. 2011-0404371E5 - Employer paid Reimbursement for ON Health Premium

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 a reimbursement paid to an employee for a portion of the cost of the Ontario Health Premium a taxable benefit?

Position: Yes.

Reasons: Generally, the value of all benefits received or enjoyed by virtue of an office or employment must be included in an employee's income pursuant to paragraph 6(1)(a) of the Act. This includes a reimbursement received for health care premiums that the employee would normally have to bear.

XXXXXXXXXX
									2011-040437
									C. Underhill

June 28, 2011

Dear XXXXXXXXXX :

Re: Employer paid Allowance for Ontario Health Premium

I am writing in response to your letter of April 21, 2011 concerning the taxation of the Ontario Health Premium ("OHP"). More specifically, you have enquired whether a reimbursement paid to an employee for a portion of the cost of the OHP is a taxable benefit.

In the situation you described, an employee receives an annual reimbursement from an employer for half of the cost of the OHP.

Our Comments

Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following general comments.

Generally, the value of all benefits received or enjoyed by virtue of an office or employment must be included in an employee's income pursuant to paragraph 6(1)(a) of the Income Tax Act (the "Act") unless it falls within one of the specific exceptions. There is no statutory exclusion for a reimbursement received by an employee for the OHP. Accordingly, a taxable benefit would arise under paragraph 6(1)(a) of the Act where an employer reimburses an employee in respect of a portion of the cost of the OHP.

As noted in CRA Guide T4130, Taxable Benefits and Allowances, the amount of taxable benefits should be reported in box 14, "Employment Income," and in the "Other Information" area under code 40, at the bottom of the employee's T4 slip.

We trust these comments will be of assistance.

Yours truly,

Phyllis Waugh
A/Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch