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.
B.W. Dath (613) 995-0051
April 28, 1981.
Dear Sirs:
This is in reply to your letter of March 11th concerning a proposed self-insured health and welfare trust fund.
It will be necessary for us to review the plan documents before we are able to express an opinion as to whether the plans that you have described are private health services plans as defined in paragraph 110(8) (a) of the Income Tax Act. However, based on the information provided we can make the following general comments:
1) The plans would appear to have the characteristics noted in Interpretation Bulletin IT-339 and therefore qualify as private health services plans. You have stated that "special executive compensation benefits" are expenses which would have been otherwise deductible under paragraph 110(1)(c) of the Act.
2) To the extent that they are reasonable, company contributions, in respect of its own employees, to a private health services plan are deductible when paid.
3) An employee benefit plan as defined in section 248 of the Act does not include a private health services plan.
4) A health and welfare trust is taxed as described in items 8 & 9 of IT-85R .
5) Because of the variety of plans and rates existing in the insurance industry, it is our view that the requirement that premiums should be computed using actuarial or similar studies would not be satisfied if payments to the health and welfare trust were based on market rates quoted by insurance companies for plans with substantially similar coverage.
6) Although there is no limit on the number or types of employees that may be covered by a plan we would generally consider that in the case of a "one man company" coverage would be received by virtue of the individual's shareholdings rather than by virtue of his employment.
7) A private health services plan does not include a simple unconditional contract to defray employee's costs.
We trust that the above information will be of assistance to you.
Yours truly,
for Director Non-Corporate Rulings Division 110(8)(a) RD/mr
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1981
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1981
Email this Content