In an economical update published on March 28th, the government of Quebec announced its decision to extend the compensation tax on insurance premiums for the next 5 years.
Since December 2014, the province had increased the tax from 3.30% to 3.48% in an attempt to replenish its coffers. While the additional 0.18% tax was supposed to decrease on March 31, 2017 and be eliminated on March 31, 2019, it has now been extended through to March 2022.
For the insurance industry and financial institutions, this law represents more than 1.3 billion dollars in taxation over the next 5 years. In a press release, the Canadian Life and Health Insurance Association said that they are ‘’disappointed that the compensation tax on insurance premiums will be extended for the next 5 years’’.