Paying for Braces or Laser Eye Surgery? Stop Using Personal Cash. How a 'PHSP' Makes It 100% Tax-Deductible

🦷 Turn Your Dentist Bill into a Business Write-Off

It is 2026. Your daughter needs braces ($7,000). You need laser eye surgery ($4,500).
Normally, you withdraw roughly $18,000 from your corporation (paying heavy personal income tax) just to have the post-tax cash to pay the dentist.

It is an inefficient way to spend your hard-earned corporate profits.

But what if your corporation could pay the dentist directly?
Under a Private Health Services Plan (PHSP)—often called a Health Spending Account (HSA) in Canada—your company pays the bill. The company gets a 100% tax deduction. You get the benefit 100% tax-free. It remains the most tax-efficient method to extract value from a Canadian corporation.

A PHSP is essentially a contract between an employer (Your Corp) and an employee (You).
It legally converts personal medical expenses into deductible business expenses.

Paying for Braces or Laser Eye Surgery?

Why It Wins

Let's compare paying a $2,000 MRI scan privately vs. through a corporate PHSP in 2026.

Scenario	Personal Cash (The Old Way)	PHSP (The Smart Way)
Medical Invoice	$2,000	$2,000
Admin Fee (Approx. 5-10%)	$0	$200
Pre-Tax Earnings Required	~$3,600 (assuming 43% marginal tax)	$2,200 (Deductible Expense)
Effective Corporate Savings	$0	$1,400+

Result: By bypassing personal income tax, your corporation retains significantly more capital.

What Does It Cover?

The CRA guidelines are surprisingly broad. It covers almost anything a licensed medical practitioner prescribes, often exceeding standard insurance limits.

• Dental: Orthodontics (Invisalign), Implants, Veneers (if restorative).
• Vision: Glasses, Contact Lenses, Laser Eye Surgery (LASIK/PRK).
• Paramedical: RMT Massage, Chiropractor, Physiotherapy, Mental Health Counseling.
• Specialized: Fertility treatments, Insulin, Orthotics, Private MRI/CT scans.

How to Set It Up

Warning: You cannot simply pay the medical bill from your corporate bank account. The CRA will flag that as a taxable shareholder benefit.
You must use a Third-Party Administrator (TPA) to act as the buffer.

The 2026 Process
1. You pay the dentist personally (using your credit card for points).
2. You upload the receipt to your TPA's app (e.g., Brock Health, Olympia, Trusted Advisor).
3. Your Corporation transfers the funds (Cost + Fee) to the TPA.
4. The TPA deposits the reimbursement directly into your personal bank account tax-free.
5. The TPA issues a tax receipt to your Corporation for year-end filing.

🛡️ Chief Editor’s Verdict

It is the cheapest "insurance" you will ever buy because you only pay when you use it.

1. The "T4" Golden Rule: To qualify, you MUST be an employee. This means you must receive T4 income (salary), not just dividends. If you are dividend-only, set up a modest salary to unlock this perk.
2. Stacking Strategy: If your spouse has a regular job with benefits, use their insurance first. Use your corporate PHSP to pay the "unpaid balance" (co-pay) that their insurance didn't cover.

Stop paying tax on your health. Let the business pay.

Jurisdiction Warning (Canada Only): The strategies described above (PHSP/HSA) are based on the Canadian Income Tax Act and CRA interpretation bulletins. US Residents: This structure does NOT apply to US LLCs or C-Corps. US business owners should research "Section 105 Medical Reimbursement Plans" or "HRAs" instead. Always consult a CPA to ensure you meet the "employee vs. shareholder" criteria to avoid audit penalties.