Latest insurance tax changes in Canada: Newfoundland and Labrador
Below is a summary of the latest Insurance Tax changes:
Temporary elimination of Retail Sales Tax on personal property insurance
- Retail sales tax
As announced in Newfoundland and Labrador’s Budget for 2022, the government has proposed an elimination of the 15% retail sales tax on personal property insurance. This elimination of retail sales tax serves as an action to help with the cost of living in the province and is effective for policies entered into or renewed between April 7th, 2022, and April 6th, 2023.
If an insurance contract was in force prior to April 7th, 2022, no refund of tax on a pro-rata basis will be provided, as the exemption is based on the date when a contract is entered into or renewed.
For changes to an existing policy or instalment plans existing prior to April 7th, 2022, the exemption will not apply. In a circumstance where both taxable and exempt coverages are bundled into a single policy, the premium must be broken down between the taxable and exempt components, and the tax rate of 15% is only applicable to the taxable portion of the premium.
Due to the retroactive nature of the elimination of retail sales tax on applicable policies, the Newfoundland and Labrador government will provide refunds to insurers in circumstances where tax has already been remitted in respect of applicable insurance policies to be returned to their customers.
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