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Manitoba RST changes coming July 1, 2020

Manitoba RST changes coming July 1, 2020

Manitoba is eliminating RST on certain insurance contracts

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Manitoba will eliminate its 7% retail sales tax (RST) on certain residential and commercial property insurance contracts, effective July 1, 2020. This new exemption will only apply to new or renewed insurance contracts that come into effect after June 30, 2020.

Insurers and brokers must adjust their systems to reflect this change, and will have to work to identify which contracts will be exempt from RST and which will continue to be RST taxable after June 30, 2020.

The province recently announced this change as part of its relief plan, in light of COVID-19.

Background

This relief was included in Manitoba's Bill 62, which received Royal Assent on April 15, 2020.

In Manitoba, the 7% RST applies to many types of insurance contracts related to goods and real property located within the province (e.g., fire and flood insurance). Note that some Manitoba insurance contracts are already exempt from RST (e.g., reinsurance contracts, health insurance and certain insurance contracts for vehicles).

Affected insurance contracts

The new RST exemption applies to new and renewed insurance contracts that come into effect after June 30, 2020, and relate to:

  • Real property located in Manitoba, including the contents of Condominium units, a unit of a housing cooperative, leased residential premises, or a leased commercial premises (unless all or substantially all of the contents insured under the contract are inventory)
  • Mortgage insurance
  • Title insurance related to a property located in Manitoba

Manitoba's Information Notice RST 20-04 contains select examples of coverage that will benefit from this exemption. As noted above, RST will still apply to insurance contracts in effect before July 1, 2020.

KPMG observations

There may be a lack of clarity for insurers and brokers, who will have to consider how the new exemption will apply to policies that bundle taxable and exempt coverage under a single premium.

Manitoba's position, as laid out in Information Bulletin No. 061, is that RST applies to the value of an entire contract that includes both taxable and non-taxable coverages if the value of each coverage is not segregated within customer billing.

However, Information Notice RST 20-04 implies that some bundled products may be treated as exempt from RST under the new rules (such as "related business interruption or income insurance that are included in a property insurance policy and not purchased as a separate policy").

We can help

For more information, please contact your KPMG adviser or one of the following Indirect Tax professionals:

Walter Sisti, National Leader Indirect Tax Services
T: 416-777-3920
E: wsisti@kpmg.ca

Annette Beshwaty
T: 514-840-2349
E: abeshwaty@kpmg.ca

Simon Proulx
T: 647-777-5318
E: sproulx@kpmg.ca

Brad Thorimbert
T: 306-934-6234
E: bthorimbert@kpmg.ca

Information is current to April 21, 2020. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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