Changes in taxes on insurance premiums have been announced in
the 2016 Newfoundland and Labrador Budget.
The 2016 Newfoundland and Labrador Budget - published by the
Ministry of Finance at the House of Assembly last month - contains
some changes in taxes on insurance premiums.
On the one hand the Retail Sales Tax of 15% is being
re-introduced; on the other hand, the Insurance Companies Tax will
increase by 1%, all taking effect from 1 July 2016.
What is a retail sales tax?
Retail Sales Tax (RST) in Newfoundland and Labrador (NL) is a
type of provincial sales tax which is levied by provinces in Canada
and varies across industries and provinces. RST was firstly
introduced on insurance premiums back in February 2000. It was then
abolished from 1 January 2008 and all policies incepting on or
after that date ceased to be liable for the tax.
What insurance policies are subject to the tax?
The reintroduced RST of 15% will be applied to insurance
premiums for property and casualty insurance policies; mainly
vehicles, homes and businesses). The following policies are exempt
from the tax:
Marine insurance, other than marine insurance on sport
watercraft, when the sport watercrafts are 20 tonnes gross or
Surety, guarantee or fidelity type bonds
Where the risks covered are both within and outside of the
Province, the tax should be calculated only upon the portion of the
payment relating to the risks within the province.
Solutions in IPT Quote
IPT Quote, TMF Group's
online tax calculation tool, will be updated with the 15%
retail sales tax. The tax will be shown payable by the insured and
administered by the insurer.
IPT Quote users should note that an insurer or insurer's
agent who maintains an office or local representative within the
province is required to register with the Department of Finance
Taxation and Fiscal Policy Branch for the purposes of collecting
the tax; where a person purchases a contract of insurance from an
out of province seller not registered to collect the tax, that
person must self-assess and remit the appropriate amount of tax
directly to the Department.
Those using IPT Quote for a global program should note that a
10% Excise Tax will be due if the business is not retained by an
approved local broker. Apart from the Retail Sales Tax, Excise Tax,
the Insurance Companies Tax will also see a rise from 4% to 5%.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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