News > Insurance Brokers Association of Newfoundland receives clarification about reintroduction of Retail Sales Tax on insurance premiums

Insurance Brokers Association of Newfoundland receives clarification about reintroduction of Retail Sales Tax on insurance premiums

posted on May 31, 2016

St. John’s, NL – The Insurance Brokers Association of Newfoundland (IBAN) has received clarification from the Government of Newfoundland and Labrador that the reinstatement of the 15% Retail Sales Tax (RST) on insurance premiums will apply only to property and casualty (P&C) insurance policies issued or renewed on or after July 1, 2016.

 

 "While IBAN is disappointed that consumers will be taxed for protecting their assets, we understand the difficult financial situation facing the province," said Kent Rowe, President of IBAN. "We have been working to confirm how the tax will be implemented in order to provide clarification and direction to our members and our clients."

 

To date, IBAN has confirmed that:

  • The 15% RST will apply to all contracts of property and casualty insurance with effective or renewal dates of July 1, 2016 or later;
  • Policies of insurance covering accident and sickness, life, certain marine, and surety, guarantee or fidelity type bonds are exempt from the RST;
  • The RST will be remitted on a basis that coincides with the timing of premium instalments;
  •  Where a person purchases insurance from an out-of-province seller not registered to collect the tax that person must self-assess and remit the tax directly to the Department of Finance;
  •  The RST will apply to all dues, assessments and transaction fees associated with an insurance policy, with the exception of Non Sufficient Funds (NSF) fees and any interest, finance charges, service charges, and underwriting fees that are broken out separately on the invoice;
  • Endorsements, or changes, to insurance policies in existence/with effective dates prior to July 1, 2016 will be exempt from the RST; and,
  • There will be limited retroactivity to April 14, 2016 applied to premature policy cancellations and government may audit these cancellations to determine if the intent was tax avoidance. Insurers and agents will be required to submit information to Department of Finance about policies cancelled and/or issued/renewed in the April 14, 2016 to June 30, 2016 period for the purpose of assessment.

 

Insurance policy renewal notices are typically issued 60 days prior to the renewal date. This means consumers receiving renewal notices in the coming days and weeks for policies taking effect on or after July 1, 2016 will see the RST reflected on those renewals. Consumers who may have received renewal notices will receive updated information on the RST application from their broker shortly.

 

“We appreciate the pressure on consumers to manage finances during this challenging time and have diligently worked to clarify outstanding details on their behalf,” added Rowe. “We encourage consumers to contact their broker to discuss questions and ensure they have the appropriate coverage for their property and vehicles going forward.”

 

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About Insurance Brokers Association of Newfoundland (IBAN)

IBAN is an association of all major insurance brokerages operating in Newfoundland and Labrador, employing more than 1,300 people across the province. IBAN is a member of the Insurance Brokers Association of Canada (IBAC), which represents more than 30,000 brokers across the country. Insurance brokers work on consumers’ behalf to secure the best coverage in the market from the most trusted and secure federally regulated insurance companies.

 

For more information, contact:

Kent Rowe, President

IBAN

753-3210 x 375

E: krowe@wedgwoodinsurance.com

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