Deduction of health/dental insurance premiums

If you’re self-employed, you can claim as a deduction from your business income premiums paid for coverage under a private health services plan, subject to certain limitations.

For the premiums to be deductible, you must be actively engaged in a business as a sole proprietor or partner. Also, self-employment must be either your primary source of income in the current year or your income from other sources must not exceed $10,000.

In addition, equivalent coverage must be extended to all permanent full-time arm’s-length employees. When a deduction is claimed, no amount paid for coverage will be eligible for the medical expense tax credit (see topic 83).

If you have no other full-time employees, or less than 50% of the employees are at arm’s length, the deduction for you and your dependants is restricted to an annual maximum of $1,500 for each of you, your spouse or common-law partner and other family members 18 years of age or older, and to $750 for each member of your household under 18.