 Since the 1998 Federal Budget, self-employed Canadians, many of whom are temporary or
contract workers, are able to deduct their health and dental insurance premiums from their business income, even if they are not incorporated! This reflects a major change in Government policy and is welcome news for the 2.5 million self-employed Canadians.
Previously, self-employed individuals could only deduct health and dental costs in excess of 3% of their net income! Under the 1998 Budget provisions, the self-employed may deduct the full amount of their health and dental premiums paid from their taxable income, subject to the limits outlined below. The net effect is to save tax at the employee's marginal rate based on their personal tax bracket. Deduction Limitations: - The taxpayer must be actively engaged in the business that deducts the health and dental expenses.
- The taxpayer's business income must represent more than half of their total annual income.
- The deduction is subject to a maximum of:
Taxpayer $1,500 Spouse $1,500 Each Child $750
Please refer to the CCRA's Business and Professional Income Guide 2004
, available from the CCRA Website. | 
