The Saskatchewan government has issued Information Bulletin PST-73 “Information for Vendors of Insurance Contracts”, to outline how Saskatchewan PST applies to the supply of insurance, effective August 1, 2017. Initially, Saskatchewan PST was to apply to most type of insurance contracts starting on July 1, 2017, but the application of PST to insurance has been delayed by one month.
PST will now apply to most insurance contracts for risks in Saskatchewan that relate to a coverage period beginning on or after August 1, 2017. In addition, any premiums charged in relation to such risks on or after August 1 will be subject to PST.
Insurance contracts which will be exempt from PST include: individual permanent life insurance policies in effect before August 1, 2017; reinsurance contracts; annuity contracts; premiums paid under the Canada Pension Plan, Employment Insurance Act (Canada) and The Workers Compensation Act; and property and liability insurance covering property or risks located outside of Saskatchewan. Similarly, insurance contracts which are purchased by individuals or employers for the life, health, or well-being of an individual who is not ordinarily a resident of Saskatchewan will be exempt from PST.
As with other taxable goods and services supplied in Saskatchewan, insurance contracts purchased by status Indians, Indian bands, or non-commercial, band-empowered entities for risks relating to property on a reserve, or to activities or locations on a reserve, may be acquired exempt from PST.
The bulletin also addresses allocations between taxable and exempt coverage in an insurance contract, including how to prorate an insurance premium covering multiple jurisdictions. Further details are also provided on the taxation of certain types of policies, including agricultural insurance, individual permanent life insurance, and group insurance and benefit plans.