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2021 Group Benefits Tax Tips for Employers and Advisors

By: Benefits by Design | Tuesday March 2, 2021

Updated : Tuesday February 7, 2023

We realize that tax time isn’t everyone’s favourite time of year, so we’re making it easier this time around! When it comes time to file, there’s a lot for employers (and therefore their Advisors) to know when it comes to their group benefits plan.

Figure out if a particular benefit is taxable or non-taxable

Introducing: 2021 Tax Quick Facts Guide to Canadian Benefits

Updated annually, the Tax Quick Facts Guide details critical information about taxes, their implications, which benefits are taxable and non-taxable, and their rates as they affect group benefits plans each year. It’s a simple and easy to reference group benefits tax tips guide for Advisors and their clients.

Benefits by Design (BBD) Inc. makes every effort to ensure that this document is accurate and up-to-date. However, legislature and policies may change over time. This document is updated annually for each new tax year.

What is in the Tax Quick Facts Guide?

Here’s what you can expect from the Guide:

Canada Pension Plan (CPP) annual contribution limits;
Quebec Pension Plan (QPP) annual contribution limits;
Employment Insurance (EI) annual updates;
Quebec Parental Insurance Plan (QPIP) annual updates;
Registered Pension/Savings Plan annual contribution limits;
Provincial Medical Plan information, including funding and payroll exemptions;
Ontario Individual Health Premiums; and
Group Benefits Taxation, detailing which benefits are taxable or non-taxable.

3 Group Benefits Tax Tips for Employers to Remember

Don’t forget these important tips!

#1. Health Care Spending Account (HCSA)s Tax Write-Off

If you offer a Health Care Spending Account (HCSA), you can claim the total amount spent on employees’ health and dental expenses as a tax write-off!

#2. Personal Spending Accounts (PSA)s are Taxable Income

Personal Spending Account (PSA) allotments are considered a part of an employee’s total compensation and thus are counted as taxable income and must be reflected on their T4A.

#3. 2020 Work from Home Tax Deduction Extended

For the year 2020 and 2021, employees who worked from home more than 50% of the time, for at least four weeks in a row due to COVID-19 can apply for a tax deduction of $2.00/day, to a maximum of $400.00! What’s more, this can be done by employees without any employer-provided documentation.

Consider reminding any employees who were (or still are) working remotely about this change. You can learn more about this from the Canada Revenue Agency (CRA) website.