6 October 1992 Income Tax Severed Letter 9224115 - Private Health Services Plan Same Sex Spouse

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.

922411
19(1) R.B. Day
(613) 957-2136

October 6, 1992

Dear 19(1)

Re: Interpretation Bulletin IT - 339R2 - Meaning of Spouse

We are writing in reply to your letter of August 11, 1992, wherein you requested our views as to whether or not a same-sex spouse could be considered to be a "spouse" and thus an eligible dependent under the terms of a company sponsored private health services plan ("PHSP").

Our Comments

We are aware of the recent decision of a Board of Enquiry, appointed under the Ontario Human Rights Act, regarding same sex couples. However, for purposes of the Income Tax Act (the "Act") and the Interpretation Bulletins which set out the Department's interpretation of the Act, the Department has taken the position that the term "spouse" includes only persons of the opposite sex who are legally married to each other according to the laws of Canada. The meaning of the term is given a limited extended meaning in subsection 252(3) of the Act with respect to certain provisions to include "a party to a voidable or void marriage ... " and is specifically defined in subsection 146(1.1) of the Act for certain RRSP provisions and the pension registration rules in section 147.1 of the Act. We note that because of perceived inequities

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in the Act relating to common law relationships, the Minister of Finance, in a Notice of Ways and Means Motion dated June 19, 1992, proposes to amend the Act to add legislation that will extend the definition of the spouse of an individual to include a person of the opposite sex who cohabits with the individual in a conjugal relationship. In view of the foregoing, the intention of Parliament in confining the definition of the term "spouse", for income tax purposes, to opposite-sex couples seems clear.

With respect to the income tax implications for a plan that provides for benefits to same-sex spouses, it is our opinion that the plan would not be a PHSP as defined in the Act and any benefits paid out of the plan would be taxable in the hands of beneficiaries. The reasons for our view are as follows:

Paragraph 1 of IT-339R2 states that in order for the contributions made on behalf of an employee to be excluded from income under subparagraph 6(1)(a)(i) of the Act, the payments must be paid for one or more of the employee, the employee's spouse and any member of the employee's household that is connected by blood relationship, marriage or adoption. Similarly, paragraph 4 of IT-339R2 states that coverage under the plan must be for hospital care or expense or medical care or expense which normally would otherwise have qualified as a medical expense as defined in subsection 118.2(2) of the Act. As stated in paragraph 9 of IT-519 entitled "Medical Expense and Disability Tax Credits", qualifying medical expenses must have been paid on behalf of the individual, the individual's spouse or dependent. Since contributions to the plan are made on behalf of ineligible persons and the plan also provides for the payment of medical expenses, on behalf of those ineligible persons, that would not be eligible medical expenses for purposes of subsection 118.2(2) of the Act, the plan would cease to qualify as a PHSP as defined in subsection 248(1) of the Act.

We trust our comments will be of assistance to you.

Yours truly,

J.A. Szeszycki
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

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