Can my corporation set up & use a Private Health Services Plan as a “pay-as-you-claim” plan if only provided to shareholders?
Yes, providing if there are just shareholders and no other “arm’s-length” employees, T4 Income was received IT Bulletin 529 (page 7 #26) outlines the official rules regarding “Top Hat” shareholder benefits regulations. One “arm’s-length” employee or an employee you can lay off (and he / she can claim EI) is necessary for the shareholder with “arm’s-length” employees to legally use a “pay-as-you-claim” Private Health Services Plan. The penalty for using a “pay-as-you-claim” ownership-only Private Health Services Plan (when you have employees), is a non-deduction to your company for the total accumulated amount & a personally taxable benefit to the shareholder (IT529 page 7 # 26).
