Premiums paid under an uninsured employee benefit plan (UEBP) are generally subject to the tax on insurance premiums at the rate of 9%.

Premiums paid by employees (or members)

The premiums paid by employees or members who are resident in Québec are subject to the tax on insurance premiums, regardless of the type of account they are paid into (e.g. an account held in trust by the employer or an account held by a third party that administers the UEBP).

The tax is collected by the employer (or organization) when the premium is paid.

Premiums paid by employers and organizations

The premiums paid by an employer are subject to the tax on insurance premiums if the employer is resident in Québec or does business there and one of the following conditions is met:

• The premiums are payable for employees that report for work at an employer establishment in Québec.
• If an employee is not required to report for work at an employer establishment, their salary or wages are paid from such an establishment in Québec.

The premiums paid by an organization (e.g. an employer association, an employer group or a union) are subject to the tax on insurance premiums if the organization is resident in Québec or does business there and one of the following conditions is met:

• The premiums are payable for members resident in Québec.
• The premiums are payable for members not resident in Québec and the organization does not do business outside Québec.

The rules for collecting and remitting the tax on insurance premiums may vary according to situation (e.g. whether a fund was created) and plan administrator.

Contact us for more information.

Premiums exempt from the tax

The premiums that an employer pays under a UEBP for an employee or that an organization pays for a member, whether in anticipation of or because of the occurrence of a risk, are exempt from the tax on insurance premiums if all these conditions are met:

• the amounts paid are income from an office or employment for which are paid:
  • contributions related to labour standards
  • contributions to the health services fund
  • contributions to the Québec Pension Plan (QPP)
• the amounts are payable because of the full or partial loss of income from an office or employment

In addition, if the amounts are paid in anticipation of the occurrence of a risk, they must not entail the creation of a fund.

Reporting and remitting the tax

For information on reporting and remitting the tax on insurance premiums, see Reporting and Remitting the Tax on Insurance Premiums.