Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Whether proposed plan qualifies as a PHSP.
Position: General comments only based on limited information provided.
Reasons: IT-339R2 and IT-519R2.
XXXXXXXXXX 2000-000515
Wm. P. Guglich
Attention: XXXXXXXXXX
March 22, 2000
Dear Sirs:
Re: Private Health Services Plan ("PHSP")
This is in reply to your letter of January 28, 2000, requesting our views as to whether your proposed plan which will pay certain medical and dental expenses, will qualify as a PHSP.
In your letter you have outlined what appears to be a proposed transaction and, therefore, we bring to your attention Information Circular 70-6R3, dated December 30, 1996, (copy enclosed). Confirmation with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. Nevertheless, we offer the following general comments based on the limited information provided.
The term private health services plan is defined in subsection 248(1) of the Income Tax Act (the "Act") and our general position on PHSPs is set out in Interpretation Bulletin IT-339R2, Meaning of Private Health Services Plan. As stated in paragraph 3 of IT-339R2, one of the requirements of a PHSP is that it must be in the nature of insurance. Further, as indicated in paragraph 4 of IT-339R2, the PHSP coverage must be for hospital care or expense or medical care or expense which normally would otherwise have qualified as a medical expense under subsection 118.2(2) of the Act.
Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction, sets out the Agency's general position regarding expenditures that may qualify as medical expenses under subsection 118.2(2) of the Act. Paragraphs 3 and 4 of IT-519R2 comment on the individuals that could be considered medical practitioners for purposes of subsection 118.2(2) of the Act.
Contributions made by an employer to or under a PHSP in respect of an employee would not be considered taxable benefits and are excluded from the employee's income from an office or employment by virtue of subparagraph 6(1)(a)(i) of the Act.
Paragraph 118.2(2)(q) of the Act provides that any premium that the individual or his or her legal representative has paid to a PHSP for that individual, the individual's spouse or a member of the household with whom the individual is connected by blood relationship, marriage or adoption, may be included as a qualifying medical expense. However, as stated in paragraph 67 of IT-519R2, paragraph 118.2(3)(b) of the Act provides that qualifying medical expenses do not include any expenses for which the individual the patient or the legal representative of such person has been or is entitled to be reimbursed (e.g., under a PHSP or other private or public medical, dental or hospital plan).
We offer the above general comments which we hope will be of assistance to you, but caution you that these are not binding on the Agency with respect to any proposed transactions.
We trust our comments will be of assistance.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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