For the past 20 or so years, there has been a tax planning vehicle that is considered the best kept secret in Canada for business owners. Its called a Private Health Services Plan (PHSP).The PHSP basically allows your company to pay your medical expenses and those of your dependents. That means that the medical costs are now business expenses that can be deducted from the income of the business. The benefits to the employees (which include the shareholders, i.e. yourself and/or your spouse) are a tax free benefit however in Quebec they are a taxable benefit on your provincial taxes.
As an example, your children need braces for their teeth glasses (it seems every child needs braces and glasses these days!?!) Along with other medical expenses throughout the year, the costs may run over $10,000. After taking into account the fee to set up a plan, the fact that your corporation will pay less taxes ( since the expense is a deduction for your business) and not having to use personal after tax money, your savings will be about $2,000 if you are in the 40% tax bracket!
The medical expenses incurred are covered 100%. You can even use your PHSP to pay for the portion of the costs for drugs that is not covered by the provincial or another private health plan. Other expenses covered are the following:
- Dental,
- Optometrist, Optical, Laser Eye Surgery
- Chiropractor
- Orthodontist,
- Periodontist,
- Therapist,
- Plastic Surgeon,
- Podiatrist,
- Dermatologist,
- and many more
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*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2015 Advisor Websites.
