On April 10, 2018 the Saskatchewan government tabled its 2018-19 budget. It forecasts revenues at $14.24 billion, with spending at $14.61 billion, leaving a $365 million deficit.

Provincial sales tax remains steady at 6% but the PST exemption has been eliminated for used light vehicles with the exception of used vehicles sold privately and purchased for less than $5,000. Exemptions will also be made for used vehicles gifted between family members.

However, the budget does restore the trade-in-allowance when determining PST. This means PST is only applied to the difference between the value of the trade-in and the selling price of the vehicle being purchased.

The PST exemption on Star Energy Appliances has also been discontinued effective April 11th. PST will also be applied to the retail sale of cannabis, although revenue generated from this has not been included in the budget because there is still considerable uncertainty as to how much will be raised.

The Saskatchewan Party government announced a 3.5% wage reduction to public sector employee compensation in last year’s budget, amounting to a projected savings of $250 million, but that plan does not appear in this year’s budget.

The government is aiming for $70 million in compensation savings over the next two years. It says this will be achieved through “efficiency initiatives” and “overtime management.” Saskatchewan Finance Minister Donna Harpauer told CBC, “There are no layoffs related to this budget.”

There will be $5.77 billion more for health care spending in the new budget with the biggest chunk for the newly created Saskatchewan Health Authority. The province is also committing $11.4 million in new money for mental health initiatives, which the province said will cover the cost of hiring 40 new full-time positions. Furthermore, HIV medications will now be 100%  covered at an additional cost of $600,000. In addition, children under the age of six with Autism Spectrum Disorder are now eligible for $4,000 in government money per year, which is a total investment of $2.8 million.

The Saskatchewan Rental Housing Supplement designed to help low income families and people with disabilities pay their rent will be replaced by a program co-developed with the federal government slated for implementation in 2020. As of July 1, 2018, the province will stop taking applications, but clients enrolled before then will continue to receive benefits.

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Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

As of August 1, 2017, the Saskatchewan PST tax applies to premiums, fees and charges for most insurance coverage including individual and group insurance such as life, mortgage, disability and supplemental health care (e.g. drugs, dental, vision or hearing care) coverage.

Similarly, PST will also apply to benefits plans including Administrative Services Only (ASO) arrangements, funded and unfunded benefit plans and qualifying trusts.

Individual permanent life insurance policies, including whole and universal life insurance, in effect prior to August 1, 2017, are exempt from PST, including all future premium payments with respect to these policies.

However, new individual permanent life insurance policies effective after July 31, 2017, will be subject to PST. Endorsements added to insurance contracts with an effective date prior to August1, 2017, are also not subject to PST.

Employee premiums under group insurance plans are taxable depending on both the place of employment and residency. An employee must live and work in Saskatchewan for the employee premiums to be taxable.

Taxability of Group Insurance Premiums
Where the employee lives	Where the employee works	Employer premiums	Employee premiums
Saskatchewan	Saskatchewan	Taxable	Taxable
Outside Saskatchewan	Saskatchewan	Taxable	Exempt
Saskatchewan	Outside Saskatchewan	Exempt	Exempt

SOURCE: Aon Hewitt Consulting

Where there is an Administrative Services Only (ASO) agreement (a contract between an employer and a third-party administrator), the premiums or payments to claimants can include dues, assessments, administrative costs and fees paid for the administration of the plan. PST will be collected on these charges and also on the premium or the payment of benefit amounts.

Several other provinces also currently charge retail sales tax on all insurance premiums including Ontario (8%) and Quebec (8%). Manitoba applies 8% RST only to life, disability, critical illness and AD&D premiums.

The polling firm, Insightrix, asked 802 respondents:  “How will your household change its insurance purchasing plans once PST is charged on all insurance premiums?” That question prompted the following responses:

• 20.3%: Reduce insurance coverage (such as downgrading the level of home insurance coverage, purchasing less crop insurance, etc.)
• 13.8%: Stop renewing some policies (such as cancelling a package policy on a vehicle)
• 48.6%: Our household won’t change its insurance purchasing plans;
• 25.4%: Not sure

“Charging the PST on insurance comes with an obvious risk,” says Todd MacKay, the Canadian Taxpayers Federation Prairie Director. “Hitting premiums with the PST will run up insurance costs by hundreds of dollars for families and thousands or tens of thousands of dollars for farmers and small businesses. More than a third of Saskatchewanians say they’ll have to reduce coverage or stop renewing some policies and that means people will have less protection when bad things happen.”

Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.