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GCT on Group Health Insurance a Deductible Expense for Companies ? Shaw

Jamaica Information / Minister of Finance and the Public Service, Hon. Audley Shaw, opens the 2017/18 Budget Debate in the House of Representatives on March 9. (FILE) + – Photo: JIS Photographer Minister of Finance and the Public Service, Hon. Audley Shaw, opens the 2017/18 Budget Debate in the House of Representatives on March 9. (FILE) Story Highlights Minister of Finance and the Public Service, Hon. Audley Shaw, says companies that pay the General Consumption Tax (GCT) on group health insurance on behalf of their workers will be able to treat the payment as a deductible expense. Deductible expenses are those that can be subtracted from a company’s income before it is subject to taxation. The imposition of the GCT on Group Health Insurance is a revenue measure that is expected to earn for the Government approximately $1.88 billion.

Minister of Finance and the Public Service, Hon. Audley Shaw, says companies that pay the General Consumption Tax (GCT) on group health insurance on behalf of their workers will be able to treat the payment as a deductible expense.

Deductible expenses are those that can be subtracted from a company’s income before it is subject to taxation.

?Simply put, those companies that are tax compliant can reduce their income tax liability in the range of 25 per cent to 33 per cent of the premiums for the Group Health Insurance. Those companies that are not tax compliant and don?t file company income tax return will bear the full impact of the GCT on group health premiums,? he explained.

Minister Shaw was closing the Budget Debate in the House of Representatives on Wednesday (March 23).

The imposition of the GCT on Group Health Insurance is a revenue measure that is expected to earn for the Government approximately $1.88 billion.

Minister Shaw explained that if a company pays fully for its staff?s group health insurance, the GCT would be paid by the company.

On the other hand, if a company pays a portion of the premium, the company would pay GCT on the portion for which it is responsible and it could also choose to pay the GCT on the part paid by the employee.

He said that where employees make a contribution, this will amount to a moderate GCT payment. ?For example, if the premium is $5,000 per month and the employee pays 20 per cent of that, which appears to be the most common practice, the employee would pay a modest $165 more per month,? he pointed out.

Mr. Shaw said that the move to impose GCT on Group Health Insurance is a part of the Government?s move towards indirect taxation.

?That typical employee is part of the $1.5-million plan. We are giving back to them $7,000, $8,000, $9,000, and $10,000 per month. If they are at $1.5 million, they will be getting $18,000 per month. You want to tell me that an employee wouldn?t want to contribute $165 in return?? the Finance Minister argued.

He added that ?any reasonable person would conclude that this amount is very modest?.

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