Canada Dental Care Plan and T4 Reporting for Employers

While the publicly funded healthcare system covers many medical services, dental care often falls outside its scope. To bridge this gap, many Canadians rely on private insurance plans or employer-sponsored dental benefit programs. The Canada Dental Benefit Program, offered by the federal government, provides financial assistance for dental expenses similar to those offered through employer-sponsored plans.

Overview of the Canada Dental Care Plan 

The Canada Dental Benefit Program operates similar to a regular insurance plan aimed at covering a portion of dental expenses for eligible individuals. These are typically offered as part of employee compensation packages, and the plans vary in coverage depending on the employer's chosen provider and negotiated terms. Covered services often include routine check-ups, cleanings, fillings, and more extensive procedures like root canals or orthodontic treatments.

The Federal Budget for 2023 included plans to create a permanent dental program for Canadians: the Canada Dental Care Plan  (CDCP). The plan is expected to complete its rollout by 2025. Sunlife has been awarded the contract to create the foundation of the CDCP.

Dental Care Providers

Dental care providers can get information on how to participate in this program through Sunlife.

It is important to note that nothing prevents a participating dental care provider from charging more than they will be reimbursed. Dental care providers just need to disclose in advance what those additional costs are. This will assist their clients in determining if they will be able to proceed with treatment or not. 

Who can access the CDCP? 

The CDCP will be available to Canadians with an annual family income of less than $90,000 who do not have access to dental coverage. For those that make under $70,000, co-pays will not apply. Additional details on eligibility can be found here . If an individual has access to dental coverage through employment benefits, they are not eligible for the CDCP, even if they choose not to take the coverage, don’t pay a premium for it, or don’t use it. 

Reporting Dental Benefits on T4s

Employers offering dental benefits to employees must accurately report the value of these benefits on T4 slips. Box 45 of the T4 slip is designated for reporting the total benefits and allowances provided to employees. For dental benefits, the value to be reported includes any contributions made by the employer towards the dental benefit plan on behalf of the employee.

Steps for Reporting Dental Benefits on T4s

1. Determine the Value of Dental Benefits: Calculate the total contributions made by the employer towards the dental benefit plan for each employee during the tax year.
2. Report on T4 Slips: Enter the total value of the dental benefits provided to each employee in Box 45 (Benefits and allowances) of the T4 slip.
3. Ensure Accuracy: Double-check all amounts entered on the T4 slips to avoid errors or discrepancies.
4. Issue T4 Slips to Employees: Provide each employee with their T4 slip by the deadline (typically the end of February following the tax year).
5. Submit T4 Information to CRA: Submit T4 information to the Canada Revenue Agency (CRA) by the required deadline using the appropriate filing method.

The new requirements for employers include providing the following information:

For calendar year 2023, and moving forward, employers must indicate on the T4 slip and/or the T4a whether, on December 31st of the taxation year applicable, an employee was eligible to access dental insurance or coverage of any kind. This includes health spending accounts.

The T4 and T4A forms have now been amended to include box 45(T4) or box 015(T4A).
 
Please note that filling out box 45 on the T4 is mandatory. 

If you are filling out a T4A, filling out box 45 is mandatory unless you report in box 016, Pension or Superannuation. If that is the case, then box 45 would be optional.
 
Employers must select one of the 5 code options to complete the tax slip:

* Payee in this case refers to the employee.
 
 Please see the following update as per the Canadian Revenue Agency: 
 
Use of code 1 – T4 slips filed for calendar year 2023 only   
To reduce the burden on employers, for calendar year 2023 only, it is not mandatory to fill out box 45 when and only when code 1 is applicable.

This administrative policy applies only if all reasonable efforts have been made to comply with the reporting requirements.
 
T4 slips filed before January 2024
To reduce the burden on employers, if you filed your T4 slips for calendar year 2023 before January 2024, you do not have to file amended T4 slips to report this code.
 
If you use a CPA or payroll provider, we highly recommend reaching out to them for further information and assistance.

Resources:

• Canada Dental Benefit
• Getting Canadians the dental care they need (Government news release)
• T4 Slip – Information for employers
• Canadian Dental Care Plan Update (SunLife)
• Canadian Dental Care Plan Support (SunLife)
• Oral Health Provider FAQ (SunLife)

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Frequently Asked Questions (FAQ) for Employers: Filling out Box 45 on the T4 for the Canada Dental Benefit Program

Q1: What is Box 45 on the T4 slip, and why is it important for the Canada Dental Benefit Program?

Box 45 on the T4 slip is designated for reporting taxable allowances and benefits not included elsewhere. For employers, it is crucial to accurately report the value of these benefits in Box 45 to comply with tax regulations and ensure transparency in employee compensation.

Q2: How do I determine the value of dental benefits for each employee?

To determine the value of dental benefits, calculate the total contributions made by the employer towards the dental benefit plan for each employee during the tax year. This includes any premiums paid to the insurance provider for dental coverage on behalf of the employee.

Q3: Are dental benefits taxable for employees?

Yes, dental benefits provided to employees are considered taxable benefits and are subject to income tax. Therefore, it is essential to report the value of dental benefits accurately on the T4 slip in Box 45 to ensure proper tax withholding.

Q4: What are the consequences of inaccurately reporting dental benefits on the T4 slip?

Inaccurate reporting of dental benefits can lead to discrepancies in tax withholding and may result in penalties or fines from the Canada Revenue Agency (CRA). It can also cause confusion for employees when filing their taxes and may result in delays or errors in processing their returns.

The minimum penalty is $100.00. 

Q5: When should I issue T4 slips to employees with the reported dental benefits?

T4 slips must be provided to employees by the end of February following the tax year. Ensure that the T4 slips accurately reflect the value of dental benefits reported in Box 45 to facilitate employees' tax filing process.

Q6: How do I submit T4 information, including dental benefits, to the CRA?

T4 information, including dental benefits reported in Box 45, must be submitted to the CRA by the required deadline using the appropriate filing method. Employers can choose to file electronically or by mail, depending on their preference and the size of their business.

Q7: Where can I find more information about reporting dental benefits on T4 slips?

For detailed guidance on reporting dental benefits and other taxable allowances and benefits on T4 slips, refer to the CRA's official website or consult with a tax professional for expert advice tailored to your specific situation.

Q8: I offer a Health Spending Account to my employees. Does this mean that they have access to dental benefits and which code should be used on the T4? 

Yes, this means that your employees do have access to dental benefits. When you fill out box 45 it indicates if you, the employer, provides access to any dental benefit for your employees. This includes access to a Health Spending Account (HSA) or Wellness Spending Account (WSA). 

Q9: I have different access to benefits for different categories of employees. How do I proceed with the reporting? 

In instances where you have different categories of employees who have different access to benefits (whether they be part-time or full time, etc.) you will have to pay close attention to the T4 that you are filling out and indicate the appropriate code in box 45 for that specific employee.