Setup RTS for Insurance Benefits

Effective July 15th , 2012 company insurance benefit plans will be taxable under Manitoba Provincial tax regulations using the Retail Sales tax rate. This tax is applicable to both the employee and employer contributions and needs to be remitted by the company to the government.

Note: The values and category names in this article are used for example, you do not have to follow them.

Employee Portion:

1. Create a new payroll category of type benefit and enter the number, name and abbreviation respectively.
2. The purpose of this document we will enter the number 433 and call the category “Group Life (EE)”*, see below a sample of the category.
   
3. Now with our employee portion defined we MUST create a tax category to based on this employee contribution. 

Employee Contribution:

1.  Create a new payroll category of type “tax”, we shall number this category 333 and called it “RST (EE)”*.
2. With the category now created define the Level as “provincial” as it applies only to Manitoba and then define the type as “Formula”.
3. In the define formula dialog select the option to add payroll category and select the employee deduction category (or categories if there are multiple taxable benefits).
4.  For each category enter the tax percentage rate, which as of July 15 2012 was 7%.  Your category setup should look similar to the one below.
   

Employer Portion:

1. The employer portion needs to be defined as a benefit payroll category as it may be taxable for the employee.  The benefit category can be defined in multiple ways.
2. If the employers portion is an absolute match to the employees portion, then we can define the category type as being a “formula” type and set the formula to be 100% of the employees portion defined above. 
3. Define the employer portion as benefit 233 and call it “Group Life (ER)”.
   
4. Define the taxes on the employers portion. The Retail sales taxes on the employers portion are payable by the employer.
5. Create a payroll category and define it as a payroll tax implying the amount is an employer only tax and will not affect the employees remittances or fillings in any way.
6. Define this category as being a “provincial” tax level and then define the type as percentage and enter the appropriate percentage rate in.
7. Return to the employers benefit category (or categories if there are more than one) and in the “Subject to” section of the category [seen above] you must set that category to be “subject to” the new payroll tax you just created.