CRA indicates that employers’ funding of employee health services through a PHSP results in non-creditable GST/HST

ETA s. 175 provides that where an employee acquires taxable services or property “for consumption or use in relation to activities of the employer,” then the employer generally will be entitled to an input tax credit where it reimburses the employee for the related charges. Would s. 175 apply to the employer covering the cost of employee health care under a private health services plan?

Bah, humbug! Obviously, there is no relation between the employer’s business and maintaining the health of the employees of that business. CRA stated:

[S]ince a medical or dental service is acquired by an employee in relation to his or her personal health and well-being, there would not be a direct connection between the service and the activities of the employer. Therefore, while the making of a payment in satisfaction of a PHSP claim may itself relate to the activities of the employer, the employee’s acquisition of a service such as massage therapy does not.

Neal Armstrong. Summaries of 10 January 2018 Interpretation 139614 under ETA – s. 123(1) – financial service – para. (f.1), and s. 175(1).