Personal Finance

Medical expenses paid by wife's benefits

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  • Feb 17th, 2017 10:39 pm
Deal Guru
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Dec 3, 2003
14494 posts
252 upvotes
Mississauga

Medical expenses paid by wife's benefits

A buddy of mine was unemployed for 1.5 years. He had some minor surgery and ended up with about $2000 in medical expenses.
His wife's benefit plan covered the costs but
Now he is wondering... Would CRA know that ?
He is thinking of adding those expenses to his taxes this year so we his income (including EI) is so low.

I know it's fraudulent. He just wants to know how the government would ever know that the expenses were reimbursed by a private health benefits insurance company.

Do insurance companies report pay- outs to plan-members family members , to the government?
Heatware 47-0

"Giving money to government is like giving whiskey and car keys to teenage boys."
11 replies
Deal Expert
Aug 22, 2011
41802 posts
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Center of Universe
Serious?
Deal Addict
Aug 19, 2013
2397 posts
1091 upvotes
The CRA would know that the wife has benefits (likely an amount related to the benefits is included in her t4). If he is asked to verify his expenses they would question if they were covered by these benefits. If he says no, it will raise suspicions and they can contact the insurance company that handles the plan and verify it.

If he's caught not only would he have to pay the taxes but also any interest and probably gross negligence penalties which is 50% of the taxes owing.

Your friend wouldn't even get much of an andvantage by doing this and is an idiot for even considering it.
Deal Addict
Aug 19, 2013
2397 posts
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Oh also forgot to add that tax evasion is a criminal offence. If CRA wanted to they could charge him criminally.
Deal Fanatic
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Sep 9, 2012
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Oakville, ON
Playing with fire. The chances of CRA finding out are low, however, the penalties if they do find out are very high - fines, penalties, and even criminal charges. All to save maybe a few hundred in taxes? Bad idea.
Deal Addict
Mar 1, 2016
1092 posts
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toronto
There is no reporting of insurance coverage to CRA, so yes your friend could commit fraud if he wanted to.
Sr. Member
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Dec 28, 2010
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Well it's def not legal but would they really find out? I don't think they'll sweat over $2000.
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Deal Addict
Jul 28, 2012
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Trois-Rivières, QC
You may tell your friend that the signature line on the T1 General tax return form clearly says:
"I certify that the information given on this return and in any documents attached is correct and complete and fully discloses all my income. It is a serious offence to make a false return."
Deal Fanatic
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Dec 27, 2009
7941 posts
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Victoria, BC
Don't do it. Seriously, why is this even a question? If you weren't out of pocket for an expense, why would you be able to claim it on your taxes? The last thing your friend wants is the CRA getting up their butt if they are unlucky enough to get this looked into. There are some items that they look more closely into than others (I've been asked several times to provide the tax forms from my college after claiming tuition and textbook expenses on my taxes). Luckily I was always on the up and up and had no problem providing. I would imagine medical expenses would also be a common one for them to audit (since many people think like your friend). My advice - DON'T DO IT.
Deal Addict
Oct 13, 2014
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Just Moved To Somewh…
I believe that box 40 "other taxable allowance and benefits" signals to the CRA that there may be an insurance policy in place whereby the employer is also making a contribution on the employees' behalf towards a medical and dental benefits insurance policy.
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Deal Guru
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Dec 3, 2003
14494 posts
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Mississauga
OK I convinced him not to do it
Heatware 47-0

"Giving money to government is like giving whiskey and car keys to teenage boys."
Deal Addict
May 15, 2013
2048 posts
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Alberta
I hope that "buddy of mine" doesn't use the username "mlc2000" lol.


CRA could ask for the medical invoices and as it's quite obvious that she has a private health insurance, it's very likely that CRA would ask for the Insurance Statement indicating the non-paid amount (the same statement is sent when doing coordination of benefits).

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