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.
Principal Issues: general comments provided
Position: N/A
Reasons: 6(1)(a)
July 28, 2010
XXXXXXXXXX
Dear XXXXXXXXXX :
I am writing in response to your correspondence regarding the taxation of premiums paid by an employer on behalf of an employee in respect of a private health services plan (PHSP). I apologize for the delay in replying.
Under the Income Tax Act, benefits received or enjoyed by an employee in respect of, in the course of, or by virtue of an office or employment are generally taxable as income from that office or employment. However, the Act specifically excludes benefits derived from the contributions made by an employer to or under a PHSP. Employer contributions cannot be considered eligible medical expenses of the employee.
The position of the Canada Revenue Agency (CRA) on what constitutes a PHSP is outlined in Interpretation Bulletin IT-339R2, Meaning of private health services plan [1988 and subsequent taxation years], which can be found on the CRA Web site at www.cra.gc.ca/E/pub/tp/it339r2. As noted in paragraph 4 of the bulletin, coverage under a PHSP must be in respect of medical expenses which normally would otherwise have qualified under subsection 118.2(2) of the Act for purposes of the medical expense tax credit. If a particular plan does not qualify as a PHSP, the amount of any benefit received out of the plan will be taxable to the employee.
Your comments in relation to the taxation of premiums paid by an employer to a PHSP held by an employee in the Province of Quebec fall within the responsibility of that province. Therefore, I invite you to direct your question to the Honourable Robert Dutil, Minister of Revenue for the Province of Quebec, by writing to Ministère du Revenu, 3800, rue Marly, Dépôt 6.2.5, 6e étage, Québec QC G1X 4A5.
I trust that the information I have provided is helpful.
Yours sincerely,
Keith Ashfield
Minister of National Revenue
G. Moore
(613) 957-2141
2010- 037216
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