As announced in the provincial budget, certain contracts of insurance will be subject to the 7% Manitoba Retail Sales Tax (“RST”), effective July 15, 2012. The following types of insurance will be affected:
- Insurance on land and buildings located in Manitoba;
- Insurance of goods located in Manitoba, including goods transported in province;
- Builder’s risk insurance taken on a building under construction;
- Title insurance;
- Liability and credit insurance;
- Group insurance contracts (including group life, accidental death, disability and critical illness, but not group health insurance);
- Mortgage insurance;
- Trip cancellation insurance purchased by a Manitoba resident; and
- Baggage insurance purchased by a Manitoba resident.
Some insurance contracts may only be partially subject to the tax, depending on the circumstances (e.g., insurance covering risks both inside and outside Manitoba and insurance containing less than 90% tax-exempt components).
Insurance contracts not subject to the tax are very similar to those exemptions available in Ontario and Quebec related to their provincial tax on insurance. However, Manitoba RST will not apply on individual or group health insurance, or individual disability, critical illness or accidental death and dismemberment insurance, or to contributions and benefits paid to and from funded or unfunded benefits plans.
Regarding the transition to the tax, RST will apply on all new or renewable contracts with a definite term (excluding group contracts) that come into effect after July 14, 2012. For group insurance contracts and taxable insurance contracts with an indefinite term, all premiums that are payable and that relate entirely to a coverage period after July 14, 2012 are subject to RST.
Insurance companies authorized to sell insurance in the province under the Insurance Act, and licensed special brokers that represent unlicensed insurance companies are required to register either online or by submitting an application form. Insurance agents and brokers are not required to register if they represent insurance companies licensed under the Insurance Act.
However, if a taxable insurance contract is purchased from a non-registered vendor, the purchaser must calculate and remit RST directly to Manitoba Finance, Taxation Division. If the purchaser is registered for RST in Manitoba, the tax must be reported and paid as tax on purchases on the next RST return. For non-registered purchasers, the tax may be remitted by completing a Casual Purchaser’s Return, with the tax payable by the 20th day of the following month where the premiums were payable.
MB Bulletin No. 061 revised