A corporate employer pays private health services plan premiums (e.g., Blue Cross) under individual policies respecting its two employees (being all its employees): its sole shareholder; and a related individual. CRA stated:
CRA…generally accepts that medical and hospital insurance plans offered by Blue Cross are considered PHSPs….
After referring to its statement in S2-F3-C2 that the “general presumption that an employee-shareholder receives a benefit or an allowance in their capacity as a shareholder when the individual can significantly influence business policy” may not apply if “all of the employees are shareholders or individuals related to a shareholder, and the benefit or allowance is comparable (in nature and amount) to benefits and allowances generally offered to non-shareholder employees of similar-sized businesses, who perform similar services and have similar responsibilities,” CRA stated:
Where PHSP benefits (e.g., premiums paid by the employer) are received by virtue of employment, such amounts are excluded from employment income by subparagraph 6(1)(a)(i)…. [W]hen an employer makes a payment to an employee for PHSP premiums, the amount is only excluded from the employee’s income if the payment is a reimbursement.
If there were a taxable benefit, both the shareholder’s premiums and the spousal premiums would be included in the shareholder’s income under s. 15(1) or 56(2).