LAB 04 — Health Spending
Business owner: what your family's medical bills really cost through your corporation's HSA vs paid personally. Individual or family — on a T4, a pension, or investment income only: what the medical bills you paid yourself are worth as a tax credit, and which spouse should claim it. Computed in your browser, nothing you enter leaves this page.
Assumes: you're an individual or family (T4, pension/T4A, or investment income only) counting only medical bills you paid yourself and no plan reimbursed — with a group plan, your co-pay plus premiums deducted from your pay (employer-paid premiums don't count); without one, the whole bill. Family expenses (you, spouse, children under 18) pool on one return for any 12-month period ending in the tax year. Credit = expenses above the lesser of 3% of net income or $2,890 (2026) × the lowest combined rate (ON 19.05% · BC 19.60% · AB 22.00%), non-refundable; tax owed is estimated as (net income − 2026 basic personal amount) × lowest rate, after the Ontario Tax Reduction / B.C. tax reduction credit. Refundable medical expense supplement (line 45200): 25% of eligible expenses, up to $1,534, reduced by 5% of family net income over $33,960 and gone at $64,640, if the claimant has at least $4,478 of work income. Provincial thresholds differ slightly from the federal one; one federal threshold is used. Dependants 18+ are not modelled. An estimate, not tax software — not exact figures. The final numbers are the ones on your tax software, from your accountant, or on your CRA Notice of Assessment.
Assumes: incorporated owner; the alternative is paying personally out of additional salary taxed at your 2026 marginal rate (combined federal+provincial brackets; federal first rate 14%, AB 8% bracket, BC 5.6% new lowest rate — 2026 budgets). METC credited at the lowest combined rate on expenses above the lesser of 3% of net income or $2,890 (2026); Ontario surtax interaction ignored. HSA admin fee 8%; ON: 13% HST on the fee, 8% RST on claims, 2% premium tax on claims+fee; BC/AB: 5% GST on the fee. Educational estimate, not advice.
Why does the HSA usually win?
Paying a $3,000 dental bill personally means earning it first: at a 43.41% marginal rate an Ontario owner must draw about $5,301 of salary. Through an HSA the corporation pays the same bill for about $3,576 all-in — deductible to the company, tax-free to you.
Why does the lower income usually claim?
Same $3,000 of out-of-pocket bills: on a $70,000 income the threshold is 3% = $2,100, so only $900 counts and the credit is about $171 at Ontario's 19.05% lowest combined rate; on a $45,000 income the threshold is $1,350, $1,650 counts and the credit is about $314. The threshold is taken once, so pool the whole family's receipts on the return with the lower threshold. The one exception is an income so low there is no tax to offset — the credit is non-refundable.
Where to go from here: the full HSA guide — what qualifies, standalone vs add-on, and the one-person-corporation rules; or group benefits if you're building the whole plan.
Where to go from here: in January, download the year's claims summary from your insurer's member portal (if you have a plan) instead of hunting receipts; pharmacies and dentists print annual statements on request. Buying your own health & dental → personal health plans, or ask us.
Book a Tax Diagnostic
The first conversation is free — your situation, our method, and whether we fit. Complex files quote an analysis fee up front: you'll know before we start.
// the only variable in this plan that gets more expensive every year is your age