Dental Care Measures Act – T4 and T4A Updates

Transcript - Dental Care Measures Act – T4 and T4A Updates

I’m Jackie, your host for today.

Let’s begin by acknowledging that the land on which I am located is the traditional unceded territory of the Algonquin Anishinaabeg People. The Algonquin peoples have lived on this land since time immemorial. We are grateful to have the opportunity to be present in this territory.

Given that we are meeting virtually, I also want to acknowledge the lands on which you are gathered from coast to coast and invite you to take a moment to acknowledge the territory in which you find yourself.

Welcome to the CRA’s Webinar on the Dental Care Measures Act and the subsequent reporting requirements of the T4 and T4As.

For today, please click on the question icon in the tool bar at the top of the screen to ask a question related to the Dental Care Measures Act. We’ll answer as many as we can during the webinar. For any other tax-related questions, call the business enquiries line at 1-800-959-5525.

Let’s get started.

In 2023, the Dental Care Measures Act came into effect in support of the Canadian Dental Care Plan. Today, we will cover essential information for employers, including how the Act impacts T4 and T4A reporting and what you need to know to fulfill your tax obligations as an employer.

Today, we’ll talk about:

• The Dental Care Measures Act
• Reporting Requirements for the T4 and T4A
• Reporting Codes for box 45 and box 15
• Examples and Special Situations

In support of the implementation of the Canadian Dental Care Plan, which helps make oral health care more affordable to eligible Canadians who do not have access to dental insurance, the Dental Care Measures Act came into effect in June 2023. The Dental Care Measures Act requires that employers, pension plan administrators, and other entities need to accurately report whether they offered dental care insurance, coverage or reimbursements of dental care and services of any kind. They must also identify whether the coverage extends to family members which includes spouses and/or dependents.

This will be reported using the new boxes on the T4 and T4A slips. These new boxes were added in 2023.

An employer, or pension plan administrator, will be required to report the level of coverage using one of the five codes on the T4 or T4A. Once they have done this, they have fulfilled their obligations.

At the top of the T4, there is now box 45. Filling out this box is mandatory for all tax years starting from 2023 and beyond. This box reports whether, on December 31 of the reporting tax year, an employer offered dental coverage of any kind to an employee. This includes access to dental care coverage, including health spending accounts and wellness accounts, reimbursements or insurance, co-paid dental benefits and opt-in dental benefits.

Box 45 also indicates to whom dental coverage was offered and available. This includes either the employee and the employee’s spouse, and/or the employee’s dependents. Employers are not required to report on spending, elements of coverage, or details on the insurance administrator or plan details. They only need to report on whether they provide access to dental care insurance, or coverage of dental services of any kind on the T4 slips that they issue. Whether the employee used these benefits or not is irrelevant so long as it was offered by the employer.

In most cases, the value in Box 45 will be consistent across all employees or specific groups of employees. For instance, if dental insurance is provided exclusively to executive employees, all executives would have the same code in Box 45. This should make it easier for larger employers to fill out Box 45 for all their employees.

Employers are required to select one of the five codes from the dropdown that best corresponds to their employee’s situation. Employers would put either code 1, 2, 3, 4 or 5 in Box 45.

Code 1 – Not eligible to access any dental care insurance or coverage of dental services of any kind.
Code 2 – Payee only.
Code 3 – Payee, spouse and dependent children
Code 4 – Payee and their spouse
Code 5 – Payee and their dependent children

An employer must report whether the employee is offered dental coverage, not whether the employee has chosen to use it, opted out or refused coverage. If dental benefits were offered, you must report that the employees were offered dental benefits and what level of coverage according to the codes provided.

Box 15 was added to the T4A beginning in 2023. It is generally for pension plan administrators who offer dental benefits along with pension income. The codes for T4A box 15 have the same values and descriptions mentioned for the T4 box 45.

Pension plan administrators will only report the appropriate code in box 15 of the T4A slip if an amount is reported in box 16, pension or superannuation. The important point to remember is that pension plan administrators who provide payments to pensioners whose pension plan includes dental coverage or

insurance in relation to the superannuation, pension or annuity payments, must select codes 2 to 5 depending on the coverage or insurance offered. If no dental insurance or coverage of any kind is offered in relation to the superannuation, pension or annuity payments, then code 1 must be selected.

Employers are ultimately accountable under the Dental Care Measures Act for ensuring the accuracy of all information reported on T4 and T4A slips. Organizations that prepare T4s or T4As on behalf of their clients —such as those paying salaries, wages, other remuneration, or superannuation and pension benefits under the Income Tax Act— will report the information provided directly by their clients.

To reduce the burden on employers, for calendar year 2024 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. In all other cases, reporting codes on the T4 and T4A are mandatory.

If an employer or pension plan administrator fails to report on the dental insurance or coverage that they offer to their employees, former employees or pensioners, then they may be penalized under the act by Health Canada.

It is your responsibility as an employer or pension plan administrator to report if you offer dental coverage or insurance on every T4 or T4A that you complete or have a third-party complete on your behalf.

Let’s start with an easy example for an employer to fill out box 45 on a T4.

Fatima works as an administrative assistant in a private firm, Fatima’s employer provides dental coverage to all its employees. The coverage is only for the employee and does not extend to spouses or dependents. Fatima’s employer would then enter code 2 on their T4 (access to any dental care insurance, or coverage of dental services of any kind for only the payee).

Now, let’s look at some special situations and examples where it may not be clear what employers or pension plan administrators need to do when it comes to filling out box 45 on the T4 and box 15 on the T4A.

Michael works as a plumber for ABC Construction. Michael currently has dental insurance for accidental coverage in case of an injury at work. However, this type of coverage does not provide dental coverage or insurance based on regular dental services. It only covers accidents that may occur on the job affecting Michael’s dental health. ABC Construction therefore does not offer dental coverage or insurance and will choose code 1 on Michael’s T4.

The employees of ABC Inc have access to an employer organized negotiated group rate for dental insurance for employees only. However, ABC Inc does not pay any part of that coverage. It simply offers that negotiated plan rate to its employees, who in turn pay for their own dental coverage. Since the employer does not pay for any coverage or care, should all employee T4 slips be marked with code 1 for all ABC Inc employees? No, that is not the correct choice. Since employees have access to an employer negotiated rate by virtue of their employment, then it qualifies as dental coverage offered by the employer. Therefore, the employer would need to report it as a code 2 in box 45 of its employees’ T4. Let’s remember that code 2 is when the employer offers dental coverage or insurance for the employee only.

Where dental insurance or coverage is offered by a union to its members or to its own employees, the union has a duty to report it, provided they are also required to issue a T4 or a T4A for reporting pension payments in Box 016. If no T4/T4A is otherwise required, the union is not required to report dental coverage. When dental coverage is offered by a union to its members, without the involvement of the employer or pension plan, the employer or pension plan has no legal obligation to report access to dental coverage. However, if the employer or pension plan provider engages any third party, including a union, to deliver dental benefits to its employees, then the employer or pension plan must report it on the T4/T4A.

In addition, where dental coverage is offered directly by an employer as per a collective agreement, that is the employer is the named sponsor of the plan or refunds the employees directly, the employer must report that coverage on its employees’ T4/T4A slips.

If an employer or pension plan administrator decides to offer tiered plans which include single, couple or family coverage. If the employee chooses which type of coverage they would like and if they want that coverage to extend to immediate family members or not. What would the employer or pension plan administrator report in this case since coverage will vary from employee to employee? Since the employer or pension plan administrator is offering tiered plans all the way up to family, then they must report code 3 on their employees’ T4/T4A slips. Whether employees choose to take the benefits or not is irrelevant. What matters is what the employer offers. In this case, since full coverage is offered for the worker, their spouse and dependents, they should report code 3. If coverage being offered is limited to only the employee and their spouse, then code 4 best reflects the dental coverage offered.

Alex has two jobs. Alex works one job with ABC Inc, and another with XYZ Inc. Here's how these employers would handle each of Alex’s T4 slips differently:

ABC Inc. does not offer any dental or insurance coverage. As a result, ABC Inc, marks Alex’s T4 in Box 45 with code 1, indicating not eligible to access dental care insurance or coverage.

On the other hand, XYZ Inc. offers dental insurance but only for Alex. XYZ Inc correctly completes Alex’s T4 slip, choosing code 2 for Box 45, indicating that Alex had access to dental care insurance or coverage.

So, in this case, Alex receives two T4 slips, each with a different code. This is accurate because one employer offers insurance coverage, and the other does not. Each employer only reports what they have offered. Both of Alex’s employers have correctly filled out their respective T4 slips.

This example highlights the importance of correctly reporting employee benefits based on what is offered.

Let’s suppose that an employee has a personal insurance plan and has negotiated a taxable allowance from the employer to cover the expense of the plan. This would count as the employer providing access to “coverage of dental services of any kind.” In this case the individual’s employer pays for the plan, making it a plan that the employer offers or provides access to. The employer would report providing access to dental coverage for all employees who had negotiated this type of allowance, regardless of whether or not they receive it. The employer would use either code, 2, 3 ,4 or 5 depending on whether dependents and the employee’s spouse also have access to that coverage.

Insurers can provide dental coverage even if they may not be an employer of that individual. What are their obligations? Insurers providing superannuation, pension, or annuity payments must report this on the T4A, along with any dental coverage linked to these payments. If dental coverage is offered separately from these payments, it should be reported as Code 1, no access to dental coverage, given that no coverage is linked to the reported payments.

Today we discussed:

• The Dental Care Measures Act
• Reporting Requirements for the T4 and T4A
• Reporting Codes for box 45 and box 15
• Examples and special situations

Tax administration is as complex as life itself. If the content today doesn’t quite fit your situation, please:

• Visit our web site
• Call CRA’s business enquiries line at 1-800-959-5525
• You can also go to canada.ca/cra-videos where you’ll find all our business webinars.

We’ve come to the end of our webinar. Please click on the survey icon in the tool bar at the top of the screen to fill out the evaluation form for this webinar. Thanks for joining me today. I hope it’s been helpful. Stay tuned for more webinars in the coming months! Goodbye.