1 November 2000 External T.I. 2000-0051715 - PRIVATE HEALTH SERVICES PLAN

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Is the reimbursement of an employee's medical health plan premiums by the employer a taxable benefit?

Position: Yes. It could be non-taxable if the payment is made directly by the employer to a private health services plan.

Reasons: One of the exceptions to taxable benefits in subparagraph 6(1)(a)(i) is "any benefit derived from contributions of the taxpayer's employer to or under a...private health services plan." In this case the contribution is being made by the employee and is reimbursed by the employer.

XXXXXXXXXX 2000-005171
J. E. Grisé
Attention: XXXXXXXXXX

November 1, 2000

Dear Sirs:

Re: Private Health Services Plan

This is in reply to your letter of October 6, 2000, concerning a town's reimbursement of its councillors' medical health plan premiums.

For purposes of the Income Tax Act (the Act) an elected councillor of a town is an employee and the councillor's employer is usually the town. With certain exceptions, the Act considers benefits received or enjoyed by a taxpayer in respect of an office or employment to be taxable as employment income. One of the exceptions is any benefit derived by a taxpayer from the contributions of the taxpayer's employer to or under a private health services plan (PHSP). In this respect, please refer to paragraph 39 of the attached Interpretation Bulletin IT-470R, Employees' Fringe Benefits, and IT-339R2, Meaning of "Private Health Services Plan".

An employer's reimbursement of an employee's medical health plan premiums in the manner you described would be included in the employee's income from an office or employment under the Act.

We hope our comments are helpful.

Yours truly,

John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch

Enclosures

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