Are you thinking about having laser eye surgery; or you’ve had it done already?

Congratulations! We’ve heard people say that it’s the best money they’ve ever spent.

Truth is, with a bit of knowledge (and just a few minutes of time), you could save a fair bit of money on this surgery — possibly even if you’ve had it already (if it’s not been more than 2 years ago).

There are mainly two ways, and here’s the best one:

If you own your own company, or even if you are an employee of a small company, you should get a PreTax Health Spending Account.

Here’s how it works:

  1. You file a claim (you can do this on line) for your laser eye surgery, with the PreTax Health HSA
  2. PreTax Health invoices your company for the surgery, plus a small admin fee. GST/HST is charged ONLY on the admin fee.
  3. Your company pays the invoice. This is a pure expense to your company and comes from it’s before-tax money
  4. PreTax Health reimburses you for the surgery via cheque or direct deposit.

This provides absolutely the best tax savings that can be had. You can find an explanation of how the tax savings work here; the short version is simply this: your company spends a lot less money this way, than if it paid you out extra salary to cover the surgery! This leaves more cash available in the company — if the company pays you out the savings in extra salary, you’ll end up with far more cash in your pocket.

When a company sets up a PreTax Health Spending Account for the first time, it can be back-dated for up to 2 years. So even if it’s been a while since you’ve had the surgery, it may still be possible to recover a substantial tax savings!

This is 100% legal and 100% compliant with CRA rules, see here for more info. The main proviso: the company must be a Canadian company, but cannot be based in Quebec.

The other way, is to claim the medical expense on your personal income tax return. If you qualify for a PreTax Health Spending Account, then that is by far the better option; so only claim the expense on your personal income tax return as a last resort.

If you do this, you’ll only get a little bit back, as CRA will exclude an initial amount from the expense, and will also only credit you at the lowest marginal rate. But better something than nothing!