Tax on Health Spending Accounts

Taxes on Health Spending Accounts

Taxation of Health Spending Accounts varies by province.  Administrators of Health Spending Accounts are required by law to collect and remit taxes to the government as per the prescribed federal and provincial rates.

All provinces apply sales tax on the administration fee amount.

A few provinces apply additional provincial regulated taxes such as:
Premium Tax – Applicable on both the Claim amount and Administration fee
Retail Sales Tax – Applicable on Claim Amount

 

The table below summarizes the taxes by province.

ProvinceGST/HST/QST
(on Admin Fee)
Premium Tax
(on Claim Amount
and Admin Fee)
Retail Sales Tax
(on Claim Amount)
Alberta5%
British Columbia (BC)5%
Manitoba5%
New-Brunswick15%
Newfoundland and Labrador15%
Northwest Territories5%
Nova Scotia15%
Nunavut5%
Ontario13%2%8%
Prince Edward Island (PEI)15%
Quebec14.975%3.480%9%
Saskatchewan5%
Yukon5%

Example

Let’s consider the following example of a $100 claim with an 8% admin fee. In this case, the taxes by province are illustrated below:

ProvinceClaim AmountAdmin Fee GST/HST/QST
(on Admin Fee)
Premium Tax
(on Claim Amount
and Admin Fee)
Retail Sales Tax
(on Claim Amount)
Total Taxes
Alberta100.008.000.400.40
British Columbia (BC)100.008.000.400.40
Manitoba100.008.000.400.40
New-Brunswick100.008.001.201.20
Newfoundland and Labrador100.008.001.205.406.60
Northwest Territories100.008.000.400.40
Nova Scotia100.008.001.201.20
Nunavut100.008.000.400.40
Ontario100.008.001.042.168.0011.20
Prince Edward Island (PEI)100.008.001.201.20
Québec100.008.001.203.769.0013.96
Saskatchewan100.008.000.400.40
Yukon100.008.000.400.40

Please note that if an administrator of Health Spending Accounts does not collect the prescribed federal and provincial taxes, the Employer is liable to assess all applicable federal and provincial taxes and remit them to the corresponding authorities! Be cautious of administrators who claim that certain taxes do not apply because they operate in a lower tax province. The GST/HST place-of-supply rules provide an in depth explanation.