April 2019

Over the last few years we’ve experienced increasing personal tax rates in Canada and significant tightening of tax planning opportunities. The personal tax rates are the highest I’ve experienced over the last forty years.

The government continue to allow private companies to establish health spending accounts. These vehicles allow a company to deduct medical expenses it reimburses it’s employees for. Different levels of reimbursement can be set, depending on the seniority of the employee.

These plans are particularly attractive to entrepreneurs and their families. Frankly, the medical tax credit isn’t worth much and the expenses which qualify are restricted. A health spending account permits the reimbursement for a broader list of medical expenses, which the company can deduct for tax purposes.

A health spending account isn’t for everyone. Each person’s situation is different. If you own a company, I recommend you discuss the benefits of the company having a health spending account with your professional advisors.

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