Why should anyone care?
Nothing seems to get a glazed look faster than a discussion on tax. Sure, if we want to complain about paying tax, or looking at the GST, we’ve plenty to say, but try simply to have a discussion on tax planning and see what happens. Feeling tired and disconnected already?
You’re not alone.
The only thing worse than that may be to combined tax and insurance.
It seems we only really care about the discussion of “tax” when we’re in front of the accountant tallying up how much is owed and being repulsed by the number as it eats into our personal and corporate wealth.
The rear window view verses the windshield
By the time we’re in front of the accountant, it’s too late. The damage has been done and now we must pay the bill. What would happen if we took a forward thinking approach, especially when it comes to your employee benefits plan.
As a reminder, outside the province of Quebec, employer benefits for pharmacy, health, vision, dental, and health spending accounts are a 100% corporate tax deduction for the employer and 100% non-taxable claim benefit to the employees.
But what’s the REAL tangible value?
Employees claim into the BILLIONS of dollars annually through their private employer plans. If these benefits became taxable, employers would no longer be able to claim the deduction, the government would collect the tax revenue and employees would likely see a reduction in their take-home pay as they would need to pay the tax on the value, never mind their out of pocket expense of their necessary health care costs.
According to a report by the Canadian Institute for Health Information (CIHI), pharmacy claims in Canada through employer-sponsored programs exceed $16.6 billion annually for roughly 58% of the population who have access to a benefit plan. Added to this, the costs of prescriptions continue to increase year-over-year between 4-6% despite efforts to reduce exposure.
Despite Canada’s progressive tax system, if this $16.6 Billion was subject to tax, the bill could amount to approximately $6.308 Billion.
$6.308 Billion is worth a dialogue.
Imagine how much non-taxable value there is in an entire benefit plan where the annual spend in Canada annually from CIHI is $30.8 Billion for pharmacy, health, vision, travel, and dental combined. This does not include claims paid by public health insurance plans funded directly by government.
There’s “power” in conversation. Let’s explore the possibilities together. I am here to help.
Book a virtual coffee to learn more.
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