Tax filing will soon require details around employee dental insurance eligibility

Dental insurance laws in Canada: 'Failing to report this information may result in financial penalties'

Tax filing will soon require details around employee dental insurance eligibility

Employers will soon have to specify details around dental care spending for employees when filing taxes. Starting with the 2023 tax year, employers issuing T4 Statement of Remuneration Paid and T4A Statement of Pension, Retirement, Annuity, and Other Income must report on a T4 or T4A slip whether – on Dec. 31 of the taxation year to which the information return relates – a payee or any of their family members were eligible to access dental insurance, or dental coverage of any kind, including health spending and wellness accounts, due to their current or former employment.

“This reporting requirement is mandatory beginning with the 2023 tax year, and will continue to be required on an annual basis,” says the Canada Revenue Agency (CRA). “Failing to report this information may result in financial penalties.”

The large majority (93 per cent) of Canadians support (61 per cent) or are open to (32 per cent) the idea of the government providing a tax credit for smaller and medium businesses that offer benefits for employees to help cover the costs of dental care, among others, according to a previous report.

To support the new requirement, the CRA added Box 45, Employer-offered Dental Benefits, to the T4. This new box will be mandatory for all slips.

The agency also added Box 015, Payer-offered Dental Benefits, to the T4A. This new box will be mandatory if an amount is reported in Box 016, Pension or Superannuation. The box will otherwise be optional.

The CRA may reject any T4 or T4A slip that is filed without this information.

The CRA notes that, for calendar year 2023 only, it is not mandatory to fill out the new box when and only when code 1 is applicable. This administrative policy applies only if all reasonable efforts have been made to comply with the reporting requirements.

Ottawa first announced in March 2022 its plans for a new dental care program, the interim benefit is intended to help lower dental costs for eligible families earning less than $90,000 per year, says the CRA.

Legislation for the Canada Dental Benefit received Royal Assent in November last year, and the CRA started accepting applications for the benefit the following month.

Bill C-31, the Cost of Living Relief Act, No. 2 (Targeted Support for Households), provides eligible parents or guardians with up to $650 tax-free per year for two years to cover dental expenses for children under 12.

In September this year, the federal government picked Sun Life to help with the rollout of the Canadian Dental Care Plan.

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