CRA indicates that a qualifying PHSP could encompass the only two employees of a corporation who are the sole shareholder and spouse

The only two employees of a corporation are its sole shareholder and a related individual (e.g., spouse). The corporation pays all their premiums under a (Blue Cross) private health services plan. CRA stated that there would be no taxable benefit (based on the exclusion in s. 6(1)(a)(i)) if they received the benefits qua employees rather than qua shareholder (or spouse of shareholder), and in this regard quoted its position in S2-F3-C2 that this test “may” be satisfied if “all of the employees are shareholders or individuals related to a shareholder, and the benefit or allowance is comparable (in nature and amount) to benefits and allowances generally offered to non-shareholder employees of similar-sized businesses, who perform similar services and have similar responsibilities.”

If there were a taxable benefit, both the shareholder’s premiums and the spousal premiums would be included in the shareholder’s income under s. 15(1) or 56(2).

Neal Armstrong. Summary of 11 January 2017 External T.I. 2016-0635351E5 under s. 6(1)(a)(i).