As you know, in the 2017-18 budget, the Government of Saskatchewan removed a longstanding exemption to the application of the Provincial Sales Tax (PST) on insurance premiums, which came into effect on August 1, 2017.
During the Saskatchewan Party leadership campaign that followed, however, then-candidate and now-Premier Scott Moe vowed to reverse the repeal on life, health, and certain agricultural coverages, retroactive to the time of enforcement.
The team at IBAS has been working closely alongside Ministry of Finance officials over the past several weeks to finalize the details with respect to what specific policies will be subject to PST going forward and how the reimbursement process will be facilitated.
This past Friday, in response to these consultations, the Province released three important documents:
- Information Bulletin: Information for Vendors of Insurance Contracts;
- Information Notice: PST Insurance Exemptions; and
- Information Notice: PST Refunds on Insurance Premiums.
While IBAS highly recommends all brokers and brokerage offices take the necessary time to review these documents in detail, there are a few key highlights to note:
- The PST no longer applies to insurance premiums for the following types of insurance contracts: Individual and group life insurance; individual and group health, disability, accident, and sickness insurance; as well as crop and livestock insurance, hail insurance, and margin/income insurance.
- When an insurance contract or policy includes both taxable and tax-exempt coverages, the value of the taxable and tax-exempt components must be listed and identified separately in the insurance contract with PST applied to the taxable portions. If these amounts are not shown separately in the contract or on the invoices issued pursuant to that contract, with tax applied to the taxable portions, PST applies to the total premium charged to the customer.
- PST collected on any tax-exempt policies must be refunded or credited to customers’ accounts by June 30, 2018. The party that collected and remitted the PST is responsible for calculating and processing the refund payable. That party must then submit a claim for reimbursement to the Ministry of Finance. Again, please note there is no credit or refund of PST paid on insurance policies that include both taxable and tax-exempt coverages when the taxable and tax-exempt coverage values are not listed and identified separately in the contract of insurance.
If you have any questions related to this matter, please contact the appropriate Ministry of Finance official outlined in the accompanying documents. Alternatively, if you have additional questions or feedback, please don’t hesitate to reach out to directly to IBAS CEO Derek Lothian at (306) 380-3765 or firstname.lastname@example.org.