Business | Winter 2010
How to use a PHSP in your farm business.
By Cindy Bablitz
Allowed under a provision of the Income Tax Act, a Private Health Services Plan (PHSP) offers tax benefits for business owners and protects them and their employees (including family members) through medical insurance that supplements coverage available under government programs. PHSPs are administered by insurance companies and other providers.
“The PHSP permits special allowances through the Income Tax Act whereby businesses can provide non-taxable health and dental benefits to plan participants and write off plan costs as direct business expenses,” says Dennis Petaski, director of member benefits and services with STRATA Benefits Consulting Inc.
Effectively, supplemental health, dental, vision care, and related expenses can be deducted by corporations, partnerships, split-income or sole proprietorships as non-taxable benefits. If your farm is not incorporated, to qualify for PHSP you must either obtain at least 50 per cent of your annual net income from the farm in which you are regularly and actively engaged or your net income from sources other than the farm may not exceed $10,000. And, deduction limits do apply.
Under a PHSP, many health costs that are typically excluded from insurance programs can be expensed. These include:
- Drugs such as smoking cessation aids and fertility treatments
- Dental procedures such as dental implants, dentures and orthodontics
- Eyeglasses, contact lenses and laser eye surgery
- Orthotics and prosthetics
- Renovations and alterations to dwellings for rehabilitative support
- Mileage for medical appointments greater than 40 km from home
A long list of other eligible expenses can be obtained by contacting STRATA toll free at 1-866-996-7477 or by requesting the private health services plan information package for all businesses by e-mail at phsp@stratabenefits.ca.
