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July 2012 Bulletin

News from The Benefit Specialists Corp.

From: The Benefit Specialists Corp. <sean.murray@telus.net>
Subject: News from The Benefit Specialists Corp.
Reply: sean.murray@telus.net

Dear sean,

 

We hope you enjoy the July 2012 edition of our bulletin.  Please feel free to

contact us if you ever have any questions or concerns, we are here to help!


 The Benefit Specialists Corp. Newsletter

 


    

                            July 2012


In This Issue
 
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COST-PLUS BENEFIT PLANS: A CAUTIONARY NOTE FOR SHAREHOLDER-EMPLOYEES
Ref: Hicks Morley

  

 Many Canadian employers offer cost-plus benefit arrangements for employees. When these arrangements qualify as a "private health services plan" under the Income Tax Act, they are afforded favourable tax treatment. In general, this means employers can deduct plan contributions from business income while, at the same time, benefits received by employees can be excluded from their income tax.

 

However, when an employee is also a shareholder, the tax implications can be reversed. In certain cases, the Canada Revenue Agency (CRA) has determined that a cost-plus benefit arrangement should be characterized as a taxable payment to a shareholder (which is not deductible by the employer) rather than a private health services plan.

 

This goes back to a 2004 decision of the Tax Court of Canada, Spicy Sports Inc. v. R. In this case, the shareholder-employee was reimbursed by his employer (the company he owned) for elective knee surgery performed in the United States at a cost of approximately $38,000. The CRA auditor determined that the shareholder-employee received payment under the cost-plus arrangement in his role as shareholder - not as an employee.

 

The court upheld the auditor's decision, concluding that it was unlikely the company would have provided the cost-plus plan to an arm's length employee. As such, the payment in question was categorized as a payment to a shareholder and not as a payment to an employee under a private health services plan. As a result, not only was the payment to the shareholder fully taxable but the company could not deduct the payment from its income.

 

CRA policy released since the Spicy Sports decision provides further clarification regarding its current position on this issue. In summary:

 

When an employee-shareholder receives a benefit under a cost-plus plan, there is a presumption that the shareholder-employee receives the payment by virtue of his or her shareholdings in situations where the shareholder can significantly influence business policy. Not with standing this presumption, a cost-plus plan provided to persons in their capacity as employees (not shareholders) may be accepted by the CRA if it passes the following test:

  • the benefit is available to all employees, including those who are neither a shareholder nor related to a shareholder (regardless of whether they have chosen to participate in the plan); or
  • the benefit is not available to all employees, but there is a logical reason to exclude some employees; or
  • it is reasonable to conclude that the benefit has been provided as part of a reasonable remuneration package for the individual as an employee; or
  • the benefit is comparable to that offered to non-shareholder employees of businesses of a similar size who perform similar responsibilities.

If you provide cost-plus benefits to shareholder-employees and the plan does not satisfy the CRA test enumerated above, consider modifying the plan terms to ensure payments are taxed as intended.

 

 

As briefly touched on in the article above, it is very important that each employee receives in writing, notification of his/her Beneco annual maximum. The Canada Revenue Agency (CRA) insists upon this rule and will penalize companies who do not abide by it. If you need assistance or have any questions regarding the article above please contact me at 403-547-5236.

 

 

 

 

 

Putting a Face on Mental Illness
 Ref: Brian Lindenberg - benefitscanada.ca

 

 

 

Mental illness costs the Canadian economy a staggering amount of money-in excess of $50 billion annually according to the Centre for Addiction and Mental Health. One in five Canadians will suffer from a mental health issue in their lifetime. In excess of 25% of all disability claims in Canada are now due to mental health issues.

 

 Yet, despite the magnitude and significance of mental health problems, most Canadians would rather sweep it under the rug; the stigma persists to the detriment of us all.

I recently attended a mental health conference where Margaret Trudeau was the featured speaker. Margaret spoke eloquently and passionately about her own struggles with mental illness. She is an incredibly courageous person to bare her soul-to open up completely-in the interest of putting a human face on mental illness.

 

Her speech, together with the rest of the speakers, confirmed for me something that I already knew: there is a lot about this issue that I don't know. It also caused me to reflect on my own experience with a very good friend who has a mental illness-one that I never really understood until now.

 

Blue (not their real name) is a wonderful, kind and generous person. Blue is a very driven person with a passion and desire to succeed that is the envy of many. But what many people do not know about Blue is that Blue has a secret struggle with inner demons that manifest themselves in a number of different ways. Blue has been under the care of a mental health professional in the past; however, denial is a powerful drug. The desire to be normal and/or the belief that inner demons can be held in check by sheer willpower has led Blue to believe that, "I have it under control."  Unfortunately, Blue does not, making daily living difficult. Life is constant chaos-most of it self-initiated. And in fact, this is where Blue seems to be most comfortable.

 

I failed Blue as a friend because I was ignorant about what to do. I had no instincts to guide me in how to deal with Blue. I saw white, Blue saw black. What was obvious to me was anything but to Blue. I expect my reaction was similar to that of most people when faced with such a situation. Most do one of the following:

  • chalk it up to a passing fad, thinking it will go away on its own;
  • trust that the individual (in the case of adults) will seek the appropriate treatment on their own; or
  • shower the person with kindness in hopes that kindness and support will be enough to see the person through.

I tried all three approaches and each one failed. I did not stop to understand the nature of Blue's mental illness. I could never understand how Blue could not grasp the significance of their behaviour. I fell into the trap of thinking "this too shall pass" and I naively believed that I could help carry some of Blue's emotional baggage, to lighten their load. Instead, I became increasingly frustrated with Blue and even began to question myself. It was not that I didn't care; I just didn't know what to do.

 

With one in five Canadians suffering from a mental health issue in their lifetime, I am sure that many others have had similar experiences. Mental illness not only impacts the individual, but also their friends, families and co-workers. Increasingly, employers will be called upon to provide a psychologically safe work environment for employees-free from stigma-and with sufficient support mechanisms in place targeted to not only those suffering from a mental health illness, but also to their friends and families.

 

In creating this psychologically safe work environment, my advice to employers is as follows:

 

 

 

 

 

  • Education is important. If I had known then what I know now, I would have treated Blue differently. It is impossible (and impractical) for line managers to know all the complexities of dealing with someone with a mental illness, but they should know the basics. They should understand how a mental illness might manifest itself, how to react when they suspect someone might be struggling and, most importantly, where to refer someone for help.

 

  •  Develop a plan of action. The Mental Health Commission of Canada (MHCC) has done some tremendous work in identifying 24 employer actions that can be implemented to protect and enhance psychological health and safety. They have created an action guide for employers.  The MHCC, together with others, are also working on the development of a standard for psychological health and safety in the workplace, which is expected to be released in the fall of 2012. There are resources available for employers who wish to deal with this issue head-on.

 

  •   Access to professional help is vital. An employer can't make someone seek treatment. All they can do is ensure that professional assistance is available. It is absolutely critical that someone dealing with a mental health issue seek professional treatment. Telling them to "snap out of it" doesn't work.  Mental illness is a serious condition that deserves the same amount of attention as someone suffering from a serious physical disease such as cancer.
  • Create a culture of caring. Although the workplace may be the cause of stress that could further complicate a mental illness, attachment to the workplace can also be critical to an individual suffering from a mental illness. In the case of Blue, it provided focus to keep the inner demons at bay. However, there may be periods of time when someone with a mental illness is simply unable to perform as you would expect. A psychologically safe work environment is prepared to work with an individual to accommodate their disability/illness in anticipation of the "bad days" (e.g., allowing them to work from home). Managers and supervisors are also wired to care. A simple "How are you, is there anything I can do to help?" goes a long way.

 

  •  Partner with vendors that understand. Helping an individual with a mental illness return to active employment is different than rehabilitating someone with a physical injury. Up until fairly recently, many insurers did not acknowledge the difference. Ask your insurer to describe the process they follow to manage the absence of someone with a mental illness, and make sure you hear the words, "We get that it's different from a physical disability."

 

 

 

The most severe cases of mental illness that make headline news are rare. The real face of mental illness is not scary.  It is people like you and me-productive members of Canadian society with so much to give. The stigma associated with mental illness forces these people to suffer in silence, which is wrong on so many levels. People with mental illness do not chose to be unwell and, yet, our collective ignorance pushes many into the world of denial. Access to treatment could make their worlds so much more fulfilling.

 

 

The brain is no different than a heart or lung. Sometimes it works perfectly, sometimes it does not. And when it does not, we need to embrace the individual and throw all available resources at the illness-not push it under the carpet. People like my good friend Blue deserve better.

 

 

 

 

 

The information contained in this bulletin is for general information purposes only. The articles published in this bulletin have been collected by The Benefit Specialists Corp. (TBSC) and we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or availability with respect to the information, products, services, or related graphics contained.  Any reliance you place on such information is therefore strictly at your own risk.  In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits out of, or in connection with, the use of the information contained in this bulletin.  Through this bulletin you are able to link to other websites which are not under the control of TBSC.  We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Sean Murray
The Benefit Specialists Corp.
sean.murray@beneco.ca
(403) 547-5236

This email was sent to sean.murray@telus.net by sean.murray@telus.net |  
The Benefit Specialists Corp. | 339 Tuscany Estates Rise NW | Calgary | Alberta | T3L 0C6 | Canada