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Taxation - PROVINCIAL AND TERRITORIAL TAXATION - Ontario - Sales tax - Persons liable for tax - Exemptions

Thursday, December 22, 2016 @ 7:00 PM  


Appeal by Capcorp Planning from an assessment of provincial sales tax. The appellant provided extended health care insurance benefits that supplemented the provincial health care scheme. Plan purchasers typically were unable to obtain extended coverage due to a pre-existing condition or other insurance impediment. Contracts were entered into with a corporation who employed the person to be covered. The level of coverage was determined by the employer. The provincial Crown audited the appellant and found that no sales tax was collected in respect of premiums paid by plan purchasers. The Crown consequently invoked a penalty for non-remittance of sales tax on the premium amounts. Capcorp appealed. It submitted that the funds at issue were not subject to tax under the definitions in the Retail Sales Tax Act.

HELD: Appeal allowed. The appellant’s insurance product fit within the definition of an unfunded benefits plan. It was not group insurance in the normal sense, as it covered individuals without creation of a general fund. The Crown did not call any evidence to contradict the fact that purchasers of the appellant’s plan used it to provide health coverage for those who could not typically obtain health coverage in a different manner from an insurer. Payments of premiums made by such persons were not taxable under the Act. The assessment was set aside.