In general, when employers provide employees with benefits in addition to their regular salary, the amount must be included in their income as a taxable benefit. However, an employee may receive certain fringe benefits tax-free.

For example, premiums for the basic provincial medical services plan are considered a taxable benefit, but premiums for private extended health and dental plans are not.

Something for employees to consider is the non-taxable benefit of premiums for a group insurance plan. If your employer pays the premiums to certain sickness, accident, or disability insurance plans, you will be taxed on any benefits received from the insurance. If you pay the premiums yourself, you will receive the benefits tax-free. Therefore, careful consideration should be paid to who pays the premiums as this could result in a cash flow problem for a disabled person relying on disability insurance payments.

Contact a Chartered Accountant if you have any questions about the advantages of paying for group insurance premiums yourself.

Information for Tax Tips is provided as a public service by the Chartered Accountants of British Columbia.