Use “Cost Plus” as a Tax Advantaged Strategy to pay your families health, dental and, certain education expenses.
Cost Plus was introduced as a cost efficient and tax effective means of providing health and dental benefits for small and medium sized businesses.
You pay your health and dental expenses as you normally would. Your business then pays
Cost Plus (the plan administrator) a payment to cover the expenses, plus an 8% administration fee (both of which are tax deductible).
Cost Plus then provides you (the employee) with a tax-free reimbursement of the expense incurred and a statement to the employer.
Cost Plus is an inexpensive way for incorporated employers and sole proprietors to provide tax free health and dental services for themselves and their dependents, their employees and their dependents.
These services, available through Cost Plus, are 100% tax deductible to the corporation or the sole proprietor.
Here is an example of how Cost Plus works:
“You submit your heath or dental receipts, e.g. $1,000.00 to the Cost Plus Plan including a payment from your company of $1,000.00 plus8% administration fee and 5% GST (on the administration fee only).
This is $1,084.00.
The Cost Plus Plan then reimburses you (the employee) with a tax-free payment equal to the expense incurred and provides a receipt for your business.”
For more tips or to ask questions, please contact your Cornwall Wealth Management Advisor.
This Blog was written by Greg Glista Financial Advisor, President Glista & Associates Partner, Cornwall Wealth Management Group Inc. & Author of Tax Advantaged Strategies.