Group Benefits GST/HST Update

Courtesy of Sun Life Focus Update

#237
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The regulations released on April 30, 2010 were enacted into law on June 9, 2010. The impact of the HST on your transactions with Sun Life depends on the nature of the arrangements that you have with us. We can now provide some information to help you better understand how the changes may affect you.

Background

The Department of Finance (Canada) released information on February 25, 2010, called “Place of Supply, Self-Assessment and Rebate Rules for Harmonized Sales Tax” followed by the regulations on April 30, 2010 providing the Place of Supply legislative framework.
Now that the regulations are enacted, we can finalize our administration processes based on the general Place of Supply rules regulations.
Sun Life previously communicated with you about the GST/HST and the Place of Supply rules. Here is a link to the most current communication for your review.

General Place of Supply rules 

The overall purpose of the Place of Supply Rules is to determine in which province the supply has been deemed to occur and, therefore, which sales tax rate will apply. The new general Place of Supply rules will rely on the location of the service recipient (i.e. the plan sponsor). Previously, the emphasis was on the location of the supplier (i.e. Sun Life) when determining the applicable sales tax rate.

How will the GST/HST be applied?

For Group Benefit services where GST/HST will apply on our fees, the regulations released by the Department of Finance, as well as the June 2010 edition of the GST/HST Technical Information bulletin released by CRA (B-103 – Harmonized Sales Tax; Place of supply rules for determining whether a supply is made in a province) were used to determine that the GST/HST be applied based on the contract address of the Plan sponsor – not where the service is performed.
For details about the services where GST/HST applies, please refer to the Frequently Asked Questions (FAQ) document attached.
Examples of how the rates will apply:  

• If a plan sponsor’s contract address is New Brunswick, the 13% HST rate will be used for all invoices/statements mailed.
• If the plan sponsor’s contract address is Quebec, then the 5% GST and 7.5% QST rates will be used for all invoices/statements mailed.
• If the plan sponsor’s contract address is Alberta, then the 5% GST rate will be used for all invoices/statements mailed

Overview of GST, HST or QST rates by Province:

Province	GST/HST/QST Rate
British Columbia	12%
Ontario	13%
Quebec	7.5%
New Brunswick	13%
Nova Scotia	13% (effective July 1, 2010, rate increases to 15%)
Newfoundland and Labrador	13%
Other provinces/Territories	5% GST

Note: When a Health & Welfare Trust is also the Plan Sponsor, the GST/HST rate will be determined based on the address of that Health & Welfare Trust for all invoices/statements mailed. In situations where the invoices/statements are mailed to a foreign address, we will look at the primary Canadian contract address listed to determine the GST/HST rate.

Other Relevant Details

Ontario Retail Sales Tax (ORST) – 8%
For invoices/statements where HST will be collected, the Ontario Retail Sales Tax of 8% will not apply on the fees. However the 8% ORST will continue to be collected on:

• ASO claims cost based on provincial distribution plus ASO fees where HST is not collected
• Group insurance premiums

Quebec Sales Tax on Goods and Services - 7.5%
As previously communicated, the new Place of Supply rules became effective on services performed on or after May 1, 2010, in New Brunswick, Nova Scotia and Newfoundland and Labrador.
It is Sun Life’s understanding , based on documents from the Quebec Budget, that the Place of Supply Rules for the QST at 7.5% (8.5% effective January 1, 2011 and 9.5% effective January 1, 2012) will also be effective May 1 , 2010. We continue to monitor this and will update you after the regulations are published.
The new rules will only become effective in Ontario and British Columbia on services performed on or after the July 1, 2010 HST implementation date.

Other Taxes

The only change slated for the other taxes applicable on Group Benefit products and services is in Quebec where the compensatory tax rate has increased from .35% to .55% effective March 31, 2010. This change increased the premium tax rate to 2.55%.

More Information

Here is a link to the Frequently Asked Questionsdocument which may be helpful. You should also contact your tax advisor to ensure you have the information you need to be ready for these tax rates changes.

Survey your employees, find out what they really want in a benefits plan.

I have recently been doing surveys of my clients employees. I have been asking a series of questions aimed at determining the areas employees value the most. the ultimate goal is to give teh employer hard data they can use to customize their plan. Dollars can be directed to benefits most appreciated by the employees and away from areas with little value.

Which benefits do you value the most? (1 = highest importance, 5 = lowest importance)

• Life Insurance
• Disability Insurance
• Extended Health Care
• Dental Care
• Critical Illness Insurance

Would you be willing to contribute via payroll deductions to a health and dental plan?

• Yes
• No

Would you be willing to contribute via payroll deductions, to a health and dental plan if the plan you received was better than if you did not contribute.

• Yes
• No

 If the cost of your benefits plan increased, and your employer was unable to pay the additional cost, would you...

• Reduce benefits to maintain the current cost
• Maintain benefits at current levels and increase your own contributions

Which Health Care benefits are most important to you? (1 = Highest importance, 4 = lowest importance)

• Prescription Drug Coverage
• Professional Services such as Chiropractor and Massage
• Hospital and Ambulance coverage
• Vision Care and Eye Exams

Electronic Drug Cards add approximately 15% to the cost of your benefits plan. Is the convenience of a drug card worth the additional cost?

• Yes
• No

Would you accept a more basic health and dental plan if you were given a flexible Health Care Spending Account?

• Yes
• No

Some of the questions are listed below. For a comprehensive survey of YOUR employee group contact me and I would be happy to provide the survey free of charge.

Care for stroke patients: $50,000 in first 6 months

The Canadian Press

Date: Tuesday Jun. 8, 2010 10:05 AM ET

TORONTO — A stroke can rob victims of the ability to speak or move an arm or leg, but a new study shows it also steals from the bank accounts of those afflicted.

The national study tallied the financial cost of a stroke in the first six months -- to both the health-care system and the patient -- and found the expense adds up to an average of $50,000 per person, with about 20 per cent of that hitting families in the pocketbook.

When the $50,000 total is multiplied by more than 50,000 new strokes per year in the Canadian population, it works out to a whopping $2.5 billion or more a year, according to the Burden of Ischemic Stroke study being presented Tuesday at the Canadian Stroke Congress in Quebec City.

"We wanted to know how much stroke costs the health-care system and patients and their families, and there had never been a national study done on this prior to this," said Dr. Mike Sharma, deputy director of the Canadian Stroke Network.

"We looked at 12 different hospitals spread across the country from Halifax to Vancouver, and we took patients who'd had stroke, after they were leaving the hospital, and gave them a diary and arranged to meet with them periodically afterwards."

Sharma, who's with the University of Ottawa and Ottawa Hospital, led the study with Dr. Nicole Mittmann of Sunnybrook Health Science Centre in Toronto. They looked at the health-care costs of 232 patients.
In their diaries, patients or a caregiver tracked appointments, medications, whether they'd had to buy canes or wheelchairs, or modify homes with ramps or other features to make them safe and accessible. They also factored in how much time a caregiver had to spend away from a job.

Sharma said the grand total came as a surprise to him.
"The average cost over the first six months was $50,000 -- and this is probably about double what I would have estimated prior to this data being available," he said.

The personal tallies ranged from a low of about $2,000 for those who essentially had no disability to more than $200,000 for individuals who were quite disabled, he said.

The average length of stay in hospital after a stroke varies widely. Sharma said Ontario has worked hard to reduce the time, and it's now less than 10 days on average in the province, but "considerably more" in other jurisdictions.

In terms of a breakdown, he was also surprised to find that 80 per cent of the total cost was related to the health-care system, in particular hospitalization, while the other 20 per cent related to lost time from jobs and expenses for families.

"The times where it makes life very difficult are in those individuals who aren't covered with health-care plans, and when the primary breadwinner in the family has been affected by stroke. So there you've got the worst of both worlds. The income for that family declines while their costs go up."

After someone has a stroke, Sharma said medications are needed to prevent more stroke and for depression and sleep issues that arise.

Frank Nieboer of Calgary can speak from experience about the difficulties families face when someone has a stroke. His wife Lou had an aneurysm -- bleeding in the brain -- 33 years ago at the age of 32.
After seven weeks in hospital, she was deemed stable enough to come home, but she was in a wheelchair and had lost the use of her right arm, right leg, her ability to speak, and she was "massively depressed" and crying all the time, he said.
"And here I am, I'm 33, I've got a day job, thank you very much, and what are we doing?" he said. "It's really a learning curve."

Lou's income was wiped out because she had to resign her bank job. Fortunately, Nieboer was in a good financial position and able to get private help for physiotherapy, occupational therapy and assistance working on speech and cognitive processes.

The Nieboers formed a support group in Calgary and have helped counsel many families, hearing in the process numerous stories about the crippling financial burden of stroke.

"A lot of younger families, it results in family breakup," Nieboer said. Sometimes a breadwinner leaves a partner and young children after the partner's had a stroke, and the family must turn to social supports, he said.
Other times, a breadwinner -- for instance a trucker, teacher or lawyer -- can't work because of physical effects, or the impact on the ability to speak. Cognitive processes can also be affected.

"You may present very well from the outside, but a lot of folks have what I call invisible deficits. They can't process information. They can't quickly process and respond," Nieboer said.

Sharma said 50,000 to 60,000 strokes a year are diagnosed, but 10 times that number are covert. It's known they occurred because scars are seen on imaging, but they weren't diagnosed because there were none of the classical symptoms. They are, however, associated with dementia and long-term difficulties.

About 87 per cent of diagnosed strokes are due to blocked blood vessels, while 13 per cent are due to bleeding, Sharma said. There are effective treatments for the blockages, such as the clot-busting medication tPA.

"If we can get at it very quickly in a centre that has expertise and if we give that treatment, we know that the probability of disability is decreased by a third," he said.

"And that is what you need to do to shift that burden from somebody who is significantly disabled to somebody who has absolutely no disability, and consequently shift the cost from those very large numbers down to one-hundredth of them."

Creative Employee Benefits solutions

Looking for creative employee benefits solutions? Look what some innovative companies are doing for their employees.

 

Published on Inc.com (http://www2.inc.com)

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10 Perks We Love

Pressed for time

McGraw Wentworth, a provider of group benefits, offers on-site pickups and return of clothes that need laundering.

A free ride

Workers at Cooper Pest Solutions can use company vehicles for their commutes. Light trucks for service technicians; Toyota Scions for sales folks.

Lunch is served

Dealer.com, which helps auto dealers with their online marketing, serves locally grown organic treats in its on-site café. Employees can have their subsidized meals delivered deskside.

Swept off your feet

Akraya, an IT staffing company, sends professional cleaners to employees' homes every two weeks.

Bonus prizes

Van Meter Industrial, a distributor of automation and electrical products, awards points for activities such as participating in its Biggest Loser contest and walking campaigns. Employees redeem points for personal fitness items, such as running shoes, golf clubs, and jogging strollers.

Do your own thing

Azavea, a maker of mapping software, follows Googlesque practices of letting employees spend up to 10 percent of their time on research projects of their own devising.

Bon voyage!

LoadSpring Solutions, an enterprise software company, believes people grow by experiencing other cultures. Employees who travel abroad for vacation receive up to $5,000 and an extra week off to expand their horizons.

Bring the kids

Fentress Architects invites employees' relatives to participate in some of the evening and weekend classes offered through its in-house education program.

Dinner's on us

After five years at NewAge Industries, a manufacturer of plastic tubing, each employee receives a yearly $720 charge card to use in the restaurant of the William Penn Inn, a 296-year-old landmark near the company's headquarters in Southampton, Pennsylvania.

Helping you help out

Patagonia, the outdoor-apparel maker, gives employees two weeks of full-paid leave to work for the green nonprofit of their choice.

© 2010 Mansueto Ventures LLC. All Rights Reserved.
Inc.com, 7 World Trade Center, New York, NY 10007-2195

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Source URL: http://www2.inc.com/ss/10-perks-we-love

Links:
[1] http://www.inc.com/top-workplaces/2010/profile/new-york-jets-woody-johnson.html
[2] http://www.inc.com/ss/portionpac-great-place-work
[3] http://www.inc.com/top-workplaces/2010/index.html
[4] http://www.inc.com/top-workplaces/2010/a-look-inside-the-un-factory.html
[5] http://www.inc.com/top-workplaces/2010/how-to-build-a-beautiful-company.html