Q.: What is a Health & Welfare Trust?
A.: A Health & Welfare Trust is a Canada Revenue Agency (CRA) approved plan that allows corporations and self-employed individuals to tax-deduct their health and dental expenses in a tax-effective and cost-efficient manner.
Q.: What is the maximum annual deduction allowed?
A.: For corporations, there are no annual limits.
However, for unincorporated individuals and their families, there is an annual limit of $1,500 per adult and $750 per child.
For example, two adults and two children would be entitled to a maximum of $4,500 per year.
Unincorporated and self-employed individuals must include the In-Province/Travel Medical insurance. This coverage ensures compliance with CRA to satisfy the ‘element of risk’ component of a Health & Welfare Trust. Lack of this ‘element’ would invalidate your Trust.
Q.: Does it matter who spends the money from the household maximum? (Non-incorporated)
A.: No it doesn’t matter. Anyone in the family can spend up to the total allowable amount for the entire family. For example, the entire $4,500 from the previous example could be applied to the wife’s laser eye surgery or the children’s orthodontic treatments.
Q.: What’s the cost?
A.: One time setup fee: $200 for documentation, fully tax deductible.
Administration fee: 10% of actual claims submitted plus GST on administration fee only.
Q.: What happens to the money in the plan?
A.: The money you contribute goes in a trust account and is withdrawn tax-free by participants provided it is used for healthcare & dental expenses.
Q.: Why use an administrator/trustee?
A.: Canada Revenue Agency (CRA) insists upon a 3rd Party Administrator or Trustee to adjudicate for accuracy and compliance.
Q.: How do I go about setting up the plan?
A.: Fill out the online application form or contact June Borlé at 604-874-4429 or toll-free 888-880-2266.
Q.: Can we backdate expenses?
A.: CORPORATION - Example #1
Corporation Year End is March 31, 2005
Trust set up date is March 12, 2005
Claims – any expenses incurred in the year of set up,
from the beginning of the corporate fiscal year may
be claimed
In this case April 1, 2004 – March 31, 2005
CORPORATION - Example #2
Corporation Year End is January 31, 2005
Trust set up date is March 12, 2005
Claims – any expenses incurred in the year of set up,
from the beginning of the corporate fiscal year may
be claimed
In this case February 1, 2005 – January 31, 2006
UNINCORPORATED AND SELF-EMPLOYED INDIVIDUALS:
Trust set up date is February 14, 2005
Claims – any expenses incurred during the 2005 calendar
year may be claimed.
In this case January 1, 2005 – December 31, 2005