Think of it like a bank account: you use the money in your account to cover any expenses left over after you've submitted claims through other benefit plans. These could include deductibles or co-payments you would otherwise have to pay. HSAs are also one of the best-kept secrets when it comes to tax-free benefits. The highlights speak for themselves:
For businesses:
- Approved by Revenue Canada in 1975
- 100% tax deductible
- Easy to understand
- Minimal set-up and administration fees
For employees:
- Covers up to the total expense
- Quick turnaround time for claims
- Non-taxable as income
- Tax-free benefit can supplement existing group benefit plans
Medical Expense Tax Credits
The following diagram gives an overview of expenses eligible for the medical expense tax credit under the Canadian income tax act. For details, please see the general income tax guide published by Canada Customs and Revenue Agency (CRA). For additional information, see the interpretation bulletin IT-519R2, medical expenses and disability tax credits and attendant care expense deduction, available on the CRA website: www.ccra-adrc.gc.ca
- Employer’s payment (item 3) is 100% tax deductible to the corporation.
- The payment received from the Health Trust by the employee is a non-taxable benefit.
Note: this diagram does not include all types of eligible expenses. There are also restrictions, limitations and requirements not specified here that may apply for tax credit purposes. For specific inquiries regarding eligible expenses, please consult your accountant. Renfrew Insurance Ltd does not assume the responsibility of advising the reader of any subsequent amendments to the Canadian income tax act or modifications to the interpretation bulletin IT-519R2.
