Hunched over at a computer? Bent over a bench? Are the long hours of self employed work taking their toll on your back and neck? Need a massage or a chiropractor visit, but it is just too expensive?

What If you could cut the after tax cost of a massage or adjustment by up to 30%?

As a self employed person, Canada Revenue gives you some special tools you can use that regular employee’s can’t. One such tool is the ability to fully deduct the cost of medical and dental expenses against business income. This includes paramedical practitioners like Registered Massage Therapy, Chiropractors, Naturopath, Physiotherapists, Acupuncture etc. Furthermore, these benefits are received by you totally tax free!

The Government wants workers to be healthy, so health care and dental care receive preferential tax treatment when it comes to employee benefit plans. But “I’m not an employee, I am self employed”, I hear you say. Not in the eyes of Canada Revenue. You and your business are two separate entities. And “Your business” can pay for “Your Healthcare” and deduct the whole thing. You receive the benefit as an employee and it is 100% tax free.

Try paying yourself $100 from your company, CRA will tax the snot out of it. But have your business pay for $100 of health care and you get it Scott free!

Now, since this is sanctioned by Canada Revenue Agency, there are, of course, some hoops to jump through.

1. You can’t just wave a magic wand and declare something is “Health Care” and *Presto* it’s tax free. No, you need to create a Private Health Services Plan (PHSP) a tax sheltering plan sanctioned by CRA.
2. The PHSP must be managed by a third party, you can’t setup a PHSP and administrate it for yourself. The third party is required by Canada Revenue to ensure the medical expenses are legit, and that if you have arm’s length employees they have an element of privacy.
3. Unincorporated Sole Proprietors have lower limits than if you have an Incorporated business.
4. If you have employees, you must give them a “Like Benefit” similar to what you give yourself.

Private Health Services plans are usually administered by Trust Companies, or Insurance Companies. The fees and services vary by provider, but there is often a small one time setup fee, followed by a 10% administration fee whenever you submit a claim.

Even after the small administration fee you can still save 10%-30% in income tax on your healthcare and dental expenses. Furthermore, these dollar do not attract CPP, EI or Worksafe premiums, further increasing your savings.

Speak with your financial advisor or an employee benefits specialist (such as myself) to start your Private Health Services Plan.

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Robert Reynolds, Certified Financial Planner, Certified Group Benefits Advisor
Partner - Hendry McKenzie Reynolds Employee Benefits Ltd.

Toll Free: 1-888-592-4614
rob@hmrinsurance.ca
www.hmrinsurance.ca

E.O. & E.