WHO QUALIFIES FOR A PHSP

Anyone in a small or medium sized business in Canada can make use of a Private Health Services Plan (PHSP) to reduce their taxes and/or contain their health benefit costs for their employees.

You Qualify for a PHSP in these Situations:

1. Corporations – Limited Company – Professional Corporations

The size of the company does not matter. From small, one-person consulting firms to a business with numerous employees; they all qualify. If you pay taxes and have medical expenses, you qualify. For corporations there are no restrictions on the amount that can be claimed in any given year.

• Small “Non Arms Length” companies can reduce their personal taxes substantially.
• Small and medium businesses with employees can offer affordable health benefits as a worker retention strategy.
• If your company already has a health benefit plan you may use a PHSP to re-structure and contain the rising premium cost of your existing benefit plan.

2. Self Employed – Sole Proprietorship or Partnership

Although unincorporated businesses have some restrictions, you can still benefit from operating a PHSP. To qualify, you must be actively engaged in your business on a regular and continuous basis AND in the current or previous year:

• " Derive more than 50% of your total income from the self employed business,OR
• " Your income from sources other than self-employment is $10,000 or less

For the purposes of this calculation, the term income is your Net Income (Line 233) with some exclusions. The specifics are described in the T4002 Guide

For unincorporated businesses, there are also restrictions on the amount that can be claimed in any given year:

• The owner/manager may claim $1500
• The spouse may claim $1500
• Children under 18 may claim $750
• Other members of the household that are 18 or over may claim $1500

These limits can be exceeded if the proprietorship has additional “arms length” employees in the business who are included in the Private Health Services Plan (PHSP).