The federal government is reviewing the taxation of employer-paid health and dental benefits. This briefing looks at financial implications for Canadian tax payers who receive these benefits.
The Implications of Taxing Employer-Paid Health and Dental Benefits
The Implications of Taxing Employer-Paid Health and Dental Benefits
Health and Healthcare
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Many Canadians currently receive extended health and dental coverage as a non-taxable benefit from their employer. The federal government recently announced a review of tax expenditures, and one of the measures examined is making employer-paid health and dental benefits subject to income tax, valued at $2.7 billion in foregone federal revenue.
The Implications of Taxing Employer-Paid Health and Dental Benefits briefing estimates the value of these benefits at $1,462 for single coverage and $3,521 for family coverage, meaning Canadians could pay over $1,000 in additional income tax.
The current system encourages Canadians to use services—such as dental and vision care and prescription drugs, among others—which in turn promotes population health and wellness. Without such a system, Canadians could pay more in medical expenses and face reduced access to health services not covered under provincial health insurance plans.
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