Medical expenses

If you pay or provide an amount to pay for an employee's medical expenses in a tax year, these amounts are considered to be a taxable benefit for the employee.

Generally, there is no GST/HST and PST to include in the value of this benefit. However, some medical expenses that qualify for the medical expense tax credit may be subject to the GST/HST and PST. In such a case, include the GST/HST and PST in the value of the benefit.

Payroll deductions

If the benefit is taxable, it is also pensionable. Deduct CPP contributions and income tax. If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non-cash benefit, it is not insurable. Do not deduct EI premiums.

Reporting the benefit

Report the taxable medical expenses in box 14 "Employment income" and in the "Other information" area under code 40 at the bottom of the T4 slip. For more information, see T4 – Information for employers.

Forms and publications

• Income Tax Folio S1-F1-C1, Medical Expense Tax Credit

• Income Tax Folio S1-F1-C2, Disability Tax Credit

• Income Tax Folio S1-F1-C3, Disability Supports Deduction

• Income Tax Folio S2-F1-C1, Health and Welfare Trusts

• Guide RC4064, Disability-Related Information