ARCHIVED CD 1994-001

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January 6, 1994

Ottawa, Canada
K1A 0S5

SUBJECT : Ontario Retail Sales Tax

1. PURPOSE

1.1 The purpose of this directive is to advise you of the implementation of the Ontario Sales tax (8%) which is to be levied on federal government employees'group insurance plan premiums.

2. BACKGROUND

2.1 On May 19, 1993, the Ontario Government introduced in their budget speech a new retail sales tax, effective July 1, 1993, which applies to group insurance premiums.

3. POLICY

3.1 The sales tax is to be paid by any person who resides in Ontario and who pays a premium in respect of an employer sponsored group insurance plan.

3.2 The Federal Government plans affected are the Public Service Health Care Plan, the Disability and Long Term Disability Insurance Plans, the Supplementary Death Benefit Plan and the Public Service Management Insurance Plan.

3.3 The sales tax is also applied to the Dental Care Plan for those employees on leave without pay who are required to pay the full cost of the premium.

3.4 The retail sales tax on any insurance plans that are not employer sponsored will not be calculated at source. Underwriters of the plans will make their own arrangements to collect and remit the tax.

3.5 Employees who are residents of Ontario and are working outside Canada are not subject to the sales tax.

4. PROCEDURES/INSTRUCTIONS

4.1 The Ontario Retail Sales Tax will be automatically calculated by the pay system and deducted starting with the first pay of February 1994.

4.2 The sales tax will be reported as a separate deduction under new code 936 and will appear on the bottom portion of the employee's payment stub.

4.3 As the sales tax is retroactive to July 1, 1993, a lump sum arrears adjustment for the period July 1993 to January 1994 inclusive will be automatically calculated and collected from the first pay in March 1994. This is a one time adjustment and will be collected under deduction code 947.

4.4 Employees on leave without pay who are paying premiums in advance for the Dental Care Plan, the Public Service Health Care Plan or the Disability/Long Term Disability Plans, are to include the sales tax in their payment effective February 1, 1994. Departments must calculate the sales tax and advise the employee of the total amount of the tax end insurance premium. The sales tax can be included in the advance premium payment but should be reported as a separate deduction as per the instructions contained in Personnel Pay-Input Manual (PPIM) 4-4-20.

5. INQUIRIES

5.1 Any inquiries on the foregoing may be addressed to the Compensation Advisory Division, Debby Plumb at 819-956-1970 or Diane Perrier at 819-956-2094.

Original Signed by
P. Charko

P. Charko
Director General
Compensation Sector
Government Operational Service Branch

Reference: CJA 9010-2