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.
24(1) 5-9713
J.D. Jones
613-957-2104
19(1)
June 11, 1990
Dear Sirs:
Re: Health and Welfare Trust
This is in reply to your letter of February 27, 1990, wherein you requested our opinion with respect to the above-noted subject in the following situation.
Specifically, you requested confirmation that the owner/manager of an incorporated company may deduct the premiums for his personal disability insurance coverage as a business expense and receive taxable proceeds when a claim is processed, even if he is the sole person in a "Health and Welfare Trust". You have also requested our confirmation that the premium, when paid by the company, is not a taxable benefit to the owner/manager.
In order to be a health and welfare trust, two or more employees must be covered by the plan in question. Accordingly, in the above situation, where there is only one employee covered in the plan and as the plan is not a private health services plan, we are of the view that the plan would not be considered to be health and welfare trust and the exception in subparagraph 6(1)(a)(i) of the Income Tax Act )the "Act") would not be applicable.
In these situations, we generally consider that an individual receives a benefit from being in a plan (including a private health services plan) by virtue of being a shareholder rather than by virtue of being an employee. As a consequence, the individual would be considered to be in receipt of a taxable benefit under subsection 15(1) of the Act.
It follows therefrom, that the payment made on the shareholder's behalf, by the corporation, would not be deductible in computing the income of the corporation.
We trust our comments are of assistance to you.
Yours truly,
for Director
Business and General Division
Specialty Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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