Why Tax Employee Paid Health Benefits?

The Federal government has initiated a broad review of federal tax expenditures. The stated goal of this review is to ensure federal tax expenditures are “fair for Canadians, efficient and fiscally responsible.” One of the issues actively being considered is the taxation of employer health benefit plans.

While we do not know what potential legislative changes are being proposed, the government has hinted at a “package” of reforms that would 1) tax employer benefits and 2) use the proceeds from this to introduce some form of broad refundable tax credit for health care expenses.

The Federal government is not consulting Canadians about their opinion on the taxing of employer paid benefits program. The Federal government has taken the big brother approach by having the Department of Finance study the issue and make a recommendation in the 2017 budget. Would you let the fox count the chickens in the hen house?

Why are these decisions being made without consulting Canadians? The top Federal tax rate in Ontario is 53.53% while the average tax rate for Ontarians making $50,000 is 29.65% and Ontarians making under $42,000 pay an average rate of 20.5% in income tax.

The average taxpayer in Ontario making $40,000 per year with an employer paid benefits plan worth $2,500 would incur an additional tax liability of $512.50 per year.

The Federal government promised to increase taxes on the top one percent of income earners but a tax on employee paid health benefits would disproportionately affect lower income earners at a higher rate than the top one percent.

Let’s take action and write to your MP today at donttaxmyhealthbenefits.ca/#more

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