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On March 13, 2019, the Ministry of Finance proposed changes to the Statutory Accident Benefits Schedule (“SABS”) under the Insurance Act to clarify that Harmonized Sales Tax (“HST”) is required to be paid by insurers in addition to the maximum accident benefit amounts limits.

In Ontario, consumers pay a 13% HST tax on many goods and services, including services such as massage therapy. Under the Insurance Act, insurance companies are required to pay these taxes in addition to the maximum accident benefit amounts limit. However, many insurance companies have ignored this directive. What this means is that injured individuals are not being given their full coverage amount. For example, if someone is entitled to receive $5000.00 per month in taxable services, the correct monthly payment they should receive is $5000.00 for services plus $650.00 for HST taxes, for a total of $5650.00. However, what many insurance companies have done is include the HST amount in the total payment so that individuals are receiving $4425.00 per month for services plus $575.00 for HST, for a total of $5000.00. This has resulted in a number of class action law suits being filed against insurance companies.

The proposed changes intend to clarify what is already required and ensure that the full accident benefit amount limit is paid for services and not towards taxes. 

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