Income Tax Act — I-3.3 20.01
PHSP premiums 20.01 (1) Notwithstanding paragraphs 18(1)(a) and (h) and subject to subsection (2), there may be deducted in computing an individual’s income for a taxation year from a business carried on by the individual and in which the individual is actively engaged on a regular and continuous basis, directly or as a member of a partnership, an amount payable by the individual or partnership in respect of the year as a premium, contribution or other consideration under a private health services plan in respect of the individual, the individual’s spouse or common-law partner or any person who is a member of the individual’s household if (a) in the year or in the preceding taxation year (i) the total of all amounts each of which is the individual’s income from such a business for a fiscal period that ends in the year exceeds 50% of the individual’s income for the year, or (ii) the individual’s income for the year does not exceed the total of $10,000 and the total referred to in subparagraph (i) in respect of the individual for the year, on the assumption that the individual’s income from each business is computed without reference to this subsection and the individual’s income is computed without reference to this subsection and Subdivision E; and (b) the amount is payable under a contract between the individual or partnership and (i) a person licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an insurance business or the business of offering to the public its services as trustee, (ii) a person or partnership engaged in the business of offering to the public its services as an administrator of private health services plans, or (iii) a person the taxable income of which is exempt under section 149 and that is a business or professional organization of which the individual is a member or a trade union of which the individual or a majority of the individual’s employees are members. Limit (2) For the purpose of calculating the amount deductible under subsection (1) in computing an individual’s income for a taxation year from a particular business, (a) no amount may be deducted to the extent that (i) it is deducted under this section in computing another individual’s income for any taxation year, or (ii) it is included in calculating a deduction under section 118.2 in computing an individual’s tax payable under this Part for any taxation year; (b) where an amount payable under a private health services plan relates to a period in the year throughout which (i) each of one or more persons (A) is employed on a full-time basis (other than on a temporary or seasonal basis) in the particular business or in another business carried on by (I) the individual (otherwise than as a member of a partnership), (II) a partnership of which the individual is a majority-interest partner, or (III) a corporation affiliated with the individual, and (B) has accumulated not less than three months of service in that employment since the person last became so employed, and (ii) the total number of persons employed in a business described in clause (i)(A), with whom the individual deals at arm’s length and to whom coverage is extended under the plan, is not less than 50% of the total number of persons each of whom is a person (A) who carries on the particular business or is employed in a business described in clause (i)(A), and (B) to whom coverage is extended under the plan, the amount so deductible in relation to the period shall not exceed the individual’s cost of equivalent coverage under the plan in respect of each employed person who deals at arm’s length with the individual and who is described in subparagraph (i) in relation to the period; (c) subject to paragraph (d), where an amount payable under a private health services plan relates to a particular period in the year, other than a period described in paragraph (b), the amount so deductible in relation to the particular period shall not exceed the amount