Q. Should my company create a private health services plan (“PHSP”)
A: With a properly structured plan, you may provide for non-taxable benefits to employees provided they are offered as group benefits. The group may include the employer/owner-manager provided their benefit is by virtue of employment and not by virtue of being a shareholder. CRA has accepted the extension of a PHSP to particular employee groups.
The plan must be in an undertaking by the employer to indemnify an employee for agreed consideration from loss or liability in respect of an event the happening which is uncertain.
A Health & Welfare Trust funded with tax-deductible dollars by the employer, pays for the medical expenses.
A PHSP is a viable mechanism for the owner-manager to use lower pre-tax corporate dollars to fund medical expenses as opposed to utilizing personal non-refundable medical tax credits yielding a much lower benefit.
You should consult with your professional advisor on all related matters