Private Health Services Plan

Applicable Canadian Income Tax Rules

PHSP costs will only be deductible if the plan is purchased from a third party in the business of selling insurance or if the plan is operated by a trustee that is in the business of operating such plans.

Where a deduction for PHSP cost is claimed, the expense amount will not also qualify for a medical expense tax credit.

Provincial health care premiums are not tax deductible through the use of a PHSP.

In 1998, our Federal Minster of Finance said,"The number of self-employed Canadians is growing daily. Many operate through unincorporated businesses. However, unlike those businesses that are incorporated, they cannot deduct premiums they pay for their supplemental health and dental plans. This is unfair. Starting this year, self-employed Canadians will be able to deduct these premiums from their business income."
Honourable Paul Martin, P.C., M.P., Minister of Finance
February 24, 1998 Federal Budget Speech

IT339R2 Meaning of private health services plan [1988 and subsequent taxation years] - A CCRA Interpretation Bulletin concerning Health and Welfare Trusts for employees and PHSPs. Because the location of this bulletin moves around, this link takes you to the Canada Customs and Revenue Agency website where you will insert IT339R2 into their Forms and publications search interface. This will locate the bulletin at the current location on the CCRA website.

IT85R2 Health and Welfare trusts for employees - A CCRA Bulletin concerning Health and Welfare Trusts and Private Health Services Plans for employees. Because the location of this bulletin moves around, this link takes you to the Canada Customs and Revenue Agency website where you will insert IT85R2 into their Forms and publications search interface. This will locate the bulletin at the current location on the CCRA website.

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