At a recent Canada Revenue Agency (“CRA”) question and answer round-table, the question was put to CRA representatives regarding CRA’s revised position regarding Private Health Services Plans. The question put to CRA was, has CRA updated its position regarding what qualifies as a private health services plan (“PHSP”)?

CRA Response

After a detailed internal review and consultation with Finance Canada and external stakeholders, the CRA has revised its position on what qualifies as a PHSP. Our previous position was that all medical expenses covered under a plan had to be eligible for the medical expense tax credit (“METC”) for the plan to qualify as a PHSP. That is, it was an all or nothing test.

Effective January 1, 2015, a plan is considered a PHSP as long as the premiums paid under the plan relate “all or substantially all” to medical expenses that would otherwise qualify for METC (assuming all other conditions to be a PHSP are met).

Further information regarding CRA’s revised position on PHSP can be found at here.