A HWT is a specific trust that satisfies certain requirements as set out in CRA guidelines (specifically paragraph 6 of the Interpretation Bulletin IT-85R2 - Health and Welfare Trusts for Employees)[3] These requirements are as follows: (a) The funds of the HWT cannot revert to the employer or be used for any purpose other than providing the health and welfare benefits for which the contributions are made; (b) The employer's contributions to the fund must not exceed the amounts required to provide the benefits; (c) The payment made by the employer cannot be made on a voluntary or gratuitous basis.
However, as per the CRA (specifically IT 85R2, paragraph 8), "……contributions to a health and welfare trust by an employer using the accrual method of computing income are deductible in the taxation year in which the legal obligation to make the contributions arose."
Furthermore, as per IT 85R2, paragraph 9c) ... "Benefits provided to an employee under a private health services plan are also not subject to tax.
The tax consequences will be different from the basic rules described above if corporate employer paid benefits are received by an individual in his or her capacity as the shareholder.
It is a question of fact as to whether these benefits are received for income tax purposes by the individual in his or her capacity as an employee or as a shareholder.
The Canada Revenue Agency (CRA) starts with the presumption that the benefit is received in the individual's capacity as a shareholder.
It is required by the corporate employer and the employee/shareholder to demonstrate that the HWT benefits are being provided to the individual in his or her capacity as an employee and that the expenses are reasonable in the circumstances.
If non-shareholder employees are excluded from coverage, there is a significant risk that the benefits provided to the employee/shareholder will be regarded as being received by him or her by virtue of his/her shareholdings.
The principle is that funds must be accumulated in the hands of trustees or in a trust account calculated to be sufficient to meet anticipated needs.
In the case of insulin, oxygen and liver extract injectable or vitamin B12 for pernicious anemia, no prescription is required.
However, in recent court cases, they can allow the eligibility of prescribed vitamins, herbs, bottled water, organic and natural foods and not dispensed by a pharmacist if the items are required to sustain the life of the user.
They can include depending on the provincial jurisdiction: • Chiropractor • Audiologist • Chiropodist • Christian Science Practitioner • Dentist • Dental Hygienist • Dental Technician • Denturist • Dietician • Osteopath • Physiotherapist • Podiatrist • Psychiatrist • Psychoanalyst • Physician and Surgeon • Psychologist • Radiologist • Massage Therapist • Midwife • Neurologist • Occupational Therapist • Optician • Speech Therapist • Registered Nurse • Respiratory Therapist • Naturopath All medical doctors, medical practitioners, dentists, pharmacists, nurses or optometrists must be authorized to practice under the laws of the provincial jurisdiction where the service is rendered, in order for the medical expenses to be eligible.
The reason for this change is that most PHSPs follow the CRA eligibility rules pertaining to the Medical Expense Tax Credit *(METC).
If the distance traveled is in excess of 80 km, the eligible costs would include meals and accommodation, in addition to transportation expenses.