How Manulife’s Group Benefits business will implement Saskatchewan’s 6% PST
In its 2017 budget, the government of Saskatchewan announced it would begin charging the 6% Provincial Sales Tax (PST) on all insurance, as defined in The Saskatchewan Insurance Act. This change was effective August 1, 2017.
According to an Information Notice and subsequent Bulletin (available in English only) provided by the Saskatchewan Ministry of Finance (the Ministry), the Saskatchewan PST will be charged on the following:
All premiums for group insurance contracts and deposits for Administrative Services Only (ASO) arrangements due on or after August 1, 2017
All premiums for individual insurance contracts including life, accident, sickness and disability insurance and critical illness insurance, due on or after August 1, 2017*.
* The PST is not applicable on individual permanent life insurance policies in effect prior to August 1, 2017. Because the PST is also not applicable on Annuity insurance contracts, Group Retirement Plans are excluded from this change.
What the Saskatchewan PST means for plan sponsors
You are required to pay Saskatchewan PST starting with your August 1, 2017 insured premiums and ASO deposits.
Based on guidance provided by the Ministry, group insurance employer premiums are taxable ONLY if the employee works in Saskatchewan and group insurance employee premiums are taxable ONLY if the employee lives AND works in Saskatchewan.
If you collect premiums from your Saskatchewan-based members, you will need to update your payroll deduction systems to account for billing the PST.
Plan sponsors who receive a monthly bill from Manulife and ASO arrangements
We have been working to develop processes for calculating, collecting and remitting the Saskatchewan PST. While we have not be able to adjust our billing systems by August 1, 2017, we expect to have our billing systems updated and ready to accommodate the tax over the next few months.
Once the system has been changed, plan sponsors who receive a monthly bill from Manulife will see a one-time retroactive charge and then a line for Saskatchewan PST on their bill going forward.
Self-administered plan sponsors who submit their bill to Manulife
Plan sponsors who prepare their own bills are required to include the Saskatchewan PST for the portion of their premium that relates to Saskatchewan employees starting August 1, 2017.
Third Party Administrators
Where you, as a Third Party Administrator (TPA) are registered or required to be registered to submit the Saskatchewan PST to the government directly, you will need to change your billing systems to do that beginning August 1. With each monthly bill, you will need to let us know you have remitted the payment. If you don’t remit the payment (or don’t let us know you have remitted the payment) then we are required to collect and remit the tax.
If you are not registered to submit the Saskatchewan PST to the government directly, Manulife will collect and remit the tax.
Are there any tax exemptions available?
Yes. Exemptions are provided for Status Indians living on a reserve, foreign diplomats and non-residents of Saskatchewan. In all cases except for non-residents, you will be required to provide additional information to validate the exemption being claimed.