Insurance shared with employer

[Brian Dolbec]

On Fri, 2006-20-01 at 18:34 -0500, David Reed wrote:
> On Jan 20, 2006, at 11:09 AM, Marc Tardif wrote:

> > I don't quite understand the distinction between a taxable and a
> > non-taxable benefit. As pointed out by Brian, I am indeed in Canada
> > so I have created the following accounts for taxes enforced by the
> > government (as far as I understand):
> >
> >   Expense:Taxes:EI (Employment Insurance)
> >   Expense:Taxes:QPP (Quebec Pension Plan)
> >   Expense:Taxes:QPIP (Quebec Parental Insurance Plan)
> >   Expense:Taxes:Federal (Federal taxes)
> >   Expense:Taxes:Provincial (Provincial taxes)
> >

As David said:  a taxable benefit is considered income like $ in your
check and is taxed.

a non-taxable benefit is one that the government does not consider as
money to you, so the give us a break on it.


> > All the above taxes are deducted from my paycheck. However, I have
> > insurance benefits paid to an insurance company also deducted from my
> > paycheck. That insurance is what I was referring to in my original  
> > email
> > which is shared half and half with my employer. Does that constitute a
> > taxable or a non-taxable benefit?
> >
> > Personally, I thought it was non-taxable because it was paid to an
> > insurance company instead of the government. So, following suggestions
> > proposed on this mailing list, I have created the following account  
> > for
> > insurance benefits:
> >
> >   Expense:Insurance:Benefits
> >
> > Also, to account for the amount of insurance benefits paid by my
> > employer, I have created the following account:
> >
> >   Income:Insurance:Benefits
> >
> > So, for each paycheck, I would add $50 to Income:Insurance:Benefits  
> > and
> > then I would add $100 to Expense:Insurance:Benefits. So, the net  
> > amount
> > that is actually deducted from my salary for insurance benefits is  
> > $50.
> >
> > -- 
> > Marc Tardif
> 

I was looking over the regulations a bit.  There are distinctions
between different types of insurance.

Basic Provincial health insurance is taxable as income.

Special extended health care insurance is non-taxable. (note: 1 link I
found with google was an employer stating that in Quebec this benefit
was taxable)

Life insurance, etc. are taxable as income.


If you want to read more then here is a 36 page document just for
benefits and whether they are taxable or not.

http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-05e.pdf  if you want it in
french, go to the root page and select french and find your way back to
the Business/payroll section.  Page 22 is about health insurance.

Something else to remember:  Quebec is different than the rest of
Canada.  They seem to have to do everything just a little bit different.
You may have to search around for one that applies to Quebec.


> 
> IANAA and I have no knowledge of Canadian taxes but think of it as if  
> your employer was paying you the full amount and then you were then  
> paying the insurance company directly. The total amount would be be  
> taxable to you (just as if you were spending the money on anything  
> yourself). Given that I would treat the entire $100 as income. If the  
> $50 you pay is taxable but the $50 the company pays is not, then I  
> would treat it as a 3 way split (the $50 of it that is taxable would  
> be included in Income:Salary, the $50 that is not taxable would be in  
> an account named something like Income:Non-taxable-benefit and then  
> you have a $100 Expense:Insurance).
> 
> In the US, certain benefits are not taxed by the federal government  
> and at least some states. But as others have mentioned, some are  
> still subject to social security/medicare tax. The most common  
> benefit that is not subject to tax is health insurance. A few  
> employers still pay the full amount but most share the cost with  
> employees, but none of it is subject to federal income tax. Changing  
> that is one of the tax reforms mentioned, but I doubt will happen  
> except for the possibility of taxing the benefit if it's over a  
> certain amount that would only hit people who's companies pay for  
> really expensive/extensive coverage. I believe that is the way life  
> insurance paid by the employer is handled - IIRC any amount paid for  
> coverage more than $100,000 is subject to tax).
> 
> So anyway, don't take any of my tax statements as 100% correct, but  
> hopefully my suggestion for making the split transaction makes sense.
> 
> HTH,
> Dave

They seem correct to me (but I'm not an accountant either), the only
thing different is the name of the plans, etc..

-- 
Brian Dolbec <brian_dolbec at telus.net>