Are Employee Group Benefits Taxable?

As an employer, offering extended health and dental benefits can be very affordable. When you pay premiums on behalf of your employees, the premiums are 100% deductible to your business and you also have the option of splitting the premiums with your employees to help bring your cost down and keep the plan affordable for all.

As an employee, premiums that are paid on your behalf by your employer for the following benefits are considered a taxable benefit by CRA:

1. Life Insurance
2. Accidental Death & Dismemberment
3. Dependent Life Insurance
4. Critical Illness Insurance

This means that the total of the amount paid for the above by your employer must be reported as income and you will be responsible for paying tax on these amounts.

For Disability Insurance, the premium is not a taxable benefit; HOWEVER, if your employer pays the premium on your behalf then if you ever are in the position of a claim, the Disability Income you receive will be taxed. With this in mind, we typically recommend that employees pay for their own Disability premiums to make sure that the benefit amount you are entitled to receive while on claim is received tax-free.

For more questions, please contact Desiree 778 245 2262, desiree@threesixtyfg.ca