A non-profit association of Canadian travellers has voiced opposition to the Saskatchewan government’s move to levy the provincial sales tax (PST) on previously-exempt travel medical insurance premiums starting August 01. The tax will also apply to all insurance premiums.
“This change will make Saskatchewan the only jurisdiction in Canada which collects retail sales tax on travel medical insurance premiums and will increase the cost of travel insurance for Saskatchewan residents,” said Karen Huestis, President of the Canadian Snowbird Association
“The Canadian Snowbird Association (CSA) is firmly opposed to the planned application of PST to travel medical insurance premiums in the province. We urge the Saskatchewan government to keep travel medical insurance premiums tax exempt, as they are in every other province and territory in the country,” she added.
The 6% rate was previously scheduled to begin on July, but the provincial government pushed it back to provide the industry with additional time to implement the application of PST and to address updates.
“The insurance industry associations have asked us for more time to implement this change and we want to ensure a smooth implementation,” Finance Minister Kevin Doherty said. “We’ve listened and have agreed to move the effective date back one month as well as update the application of PST to ensure it is applied fairly across the industry.”
According to the CSA, supplementary travel medical insurance is a necessity for those who travel outside of Canada as the government of Saskatchewan only reimburses travellers a maximum of $100 per day for emergency in-patient hospital care received abroad.
Some provinces in Canada, such as Manitoba, exempt travel medical insurance premiums from retail sales tax because health insurance covering the health care costs of insured individuals is deemed a non-taxable insurance contract, it added.
“Other provinces, such as Newfoundland and Labrador, exempt travel medical insurance premiums from retail sales tax because the insurance coverage relates to risk, peril or events outside of the province,” it explained.
“Saskatchewan’s practice for reimbursing residents for emergency health services while abroad contravenes the portability criterion of the Canada Health Act, which requires the healthcare insurance plan of a province to provide the same access to emergency health services outside of Canada as they do in Canada,” said the CSA in a statement.
The provincial government expect levies on insurance premiums to increase PST revenue by $157.9 million in fiscal year 2017-2018. It said several tax initiatives introduced in the budget shift the revenue base away from its reliance on non-renewable resource revenues, while ensuring taxes remain fair and competitive.
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