Do you share the cost of your benefit plan (through payroll deduction) with your employees?

Employees who share the cost of their health and dental premium are entitled to claim their contribution amount on their annual tax return. The portion deducted from employees should be reported annually in box 85 on your employees T4.

The following information is directly from the CRA site. “If you make contributions to a private health services plan (such as medical or dental plans) for employees, there is no taxable benefit to the employees.

  • Employee-paid premiums to a private health services plan are considered qualifying medical expenses and can be claimed by the employee on his or her income tax and benefit return.
  • Do not deduct CPP contributions, EI premiums, or income tax from benefits you provide to employees under private health services plans.

Include the amount that the employee paid on a T4 slip in the “Other information” area under
code 85. The use of code 85 is optional. If you do not enter code 85, we may ask the employee to
provide supporting documents.”

Use the T4A slip to report these amounts for former employees or retired employees. Enter the amount under code 135, “Recipient-paid premiums for private health services plans,” in the “Other information” area at the bottom of the T4A slip.

For more information on private health services plans, go to Private Health Services Plan and see Interpretation Bulletin IT-339R, Meaning of ‘private health services plan’ (1988 and subsequent taxation years).

To be clear, employer paid premiums under a private health services plan are not taxable; do not report this benefit on a T4 slip.

Please ensure you pass this information on to your payroll provider or accounting department.