You are currently browsing the daily archive for January 3, 2008.
The holidays may be over for many of us, but Private Health Services Plan (PHSP) season has just begun. Since PHSP contributions are declared on your annual personal taxes to Canada Revenue Agency, they are accounted for on an annual basis. The earlier in the year you start making contributions, the better off you are by year end.
For Example:
If you are a self-employed professional with a spouse or dependent over 18 years of age, the annual allowance for you to deposit into a PHSP would be 2 x $1500 or $3,000 in total. However, this is assuming that you started the plan in January. If you started the plan in July, you would only be allowed to claim for 6 months worth of contributions, or half of the $3,000 you deposited into the PHSP. You could still deposit the $3,000, but would only receive the tax relief of 6 months worth of access.
If you are an unincorporated sole-proprietor in Canada considering the idea of opening a Private Health Services Plan in 2008, now is the time to do so.
Every time I meet with a financial advisor, a lawyer, an accountant, or a potential Benecaid client, I am always asked the same thing…
What is an eligible claim?
Well, many different providers of HSAs have different interpretations on what CRA is trying to say. Medical expenses eligible to be paid out of the HSA (HWT or PHSP) are expenses which would otherwise qualify as medical expenses within section 118.2(2) of the Income Tax Act. The list is pretty long when you think about ALL the varying practitioners, procedures, and conditions out there. So here are a few simple rules to make it easier…
-
Treatments MUST be performed by a Licensed Medical Practitioner.
-
Products must be prescribed by a Licensed Medical Practitioner AND dispensed by a Licensed Pharmacist or Licensed Medical Practitioner.
Important!! Don’t forget that each province sets the guidelines as to what a Licensed Medical practitioner is! If the health profession has a college established granting registration numbers and certificates to each practitioner (like doctors, dentists, etc..), then chances are they are licensed.
Equally Important!! The Licensed Medical practitioner must be licensed in the jurisdiction of the HWT or PHSP account holder. What does that mean? Well, if you live in Alberta (where massage therapy is not regulated by a college) and visit Ontario (where it is considered a licensed medical practitioner), your claim should be rejected by your HSA administrator. Why? Because the service was not considered an eligible expense in your home jurisdiction. Think about that before your next holistic accu-aquatherapy-meditation trip to Bora Bora!
