The recent federal budget, announced March 29th, 2012, has implications that will likely impact you as an employer:

Employer Paid Accidental Death and Dismemberment (AD&D) and Critical Illness Plans.

Currently, the premium paid by the employer for AD&D and Critical Illness is a non-taxable benefit to the employee.

Starting in 2013, the premium paid by the employer for these benefits will be taxable to the employee.
This means that any premium paid on behalf of the employee for these benefits will need to be added to the employee’s T4 slip as income.

Further, payroll systems will need to be updated to reflect the change in tax treatment.

This change will not impact Health, Dental, and Health Care Spending Accounts. The employee is not taxed on premium paid by the employer for these benefits.

These changes can be found on pages 394 and 395 of the federal budget.

Proposed Changes to Long Term Disability Plan Funding

The government is proposing to table legislation that will make it mandatory for employers that currently self-insure Long Term Disability, to insure this benefit on a go forward basis. The rational for this legislation is to protect disabled employees from employers who go bankrupt.

This proposal can be found on page 180 of the federal budget.

Prepared by: BenefitLink