In respect of employer provided health benefits, wage loss replacement benefits and group term life insurance benefits, does a change in the cost sharing arrangement, to provide for total employer funding, result in a taxable benefit to the employee?
If there is a coincidental negotiated decrease in the salary levels would the increased employer contributions remain non-taxable to the employee?
Are employer contributions under the amended arrangements deductible to the employer?
As long as employer contributions are in respect of benefits listed in subparagraph 6(1)(a)(i) then they would not be taxable to the employees.
If employment contracts are renegotiated to effect lower salary levels there would be no tax consequences. If increased employer contributions is really a redirection of amounts of salary legally due to the employee under a valid contract of employment, then taxable remuneration would not be decreased, the contributions would be employee contributions.
Contributions to health benefit plans that are actuarially determined and reasonable are deductible to the contributing employer.