Canada Dental Benefit and your employee benefits plan

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The federal government’s Canada Dental Benefit launched roughly a year ago and up until now, there hasn’t been too much of an impact on employee benefits plans. However, as we approach the end of the year, organizations start thinking about preparing tax paperwork for their employees. As such, there are a few important things to be aware of.

Requirements for tax reporting will be changing moving forward as of the 2023 taxation year. Below is an overview of what the Canada Dental Benefit is all about and some high-level details on the tax implications. While the intention of this blog is to give you a broad understanding, we are not in a position to advise on tax reporting. Employers should consult with a tax expert or an accountant to confirm the finer details.

1. What is the Canada Dental Benefit?

This interim benefit provides dental coverage to families with children aged 12 and under. Eligibility is based on the net income. Households who earn less than $90,000 a year are eligible. However, if anyone in the family has access to private dental insurance, then the household is not eligible for the Canada Dental Benefit.

The value of the benefit ranges on a sliding scale from $260 to $650 annually for each child under 12 years old. Coverage is based on a family’s income. As such, the value of the benefit goes down as a family’s net income approaches the $90,000 threshold for eligibility.

 2. Will This Impact Employee Benefits Plans?

If your employee benefits plan includes dental coverage, then employees with dependents are automatically ineligible for the Canada Dental Benefit. This is a question that you might see come up from people in your organization if they hear about the federal program. You can direct employees to the Government of Canada website if they want more information.

As a plan administrator, the most significant impact of the Canada Dental Benefit at this point in time is related to your tax reporting. Starting with the 2023 tax year, all employers in Canada need to update their reporting in T4 and T4A slips to indicate if they offered dental benefits to their employees.

3. How Does Tax Reporting Change?

There will be a new mandatory tax reporting requirement in T4 and T4A slips for the 2023 taxation year. You should speak to a taxation expert or your accountant to verify the new tax reporting requirements. T4 and T4A slips will now include boxes where you need to input a code that confirms whether an employee had access to dental coverage and/or if dental care insurance. There is a specific code system for this, which your accountant can advise on.

Conclusion

Don’t forget that the Canada Dental Benefit is being positioned as an interim plan. This means that it’s likely that some of the details here might change in the future. If you’re wondering how your dental coverage is currently impacted by the plan, reach out to us for a chat.