Health Spending Accounts (HSA) cover the health services that you need to be healthy, such as: dental, optometry, prescription drugs, massage, physiotherapy etc. Money spent from this account is tax exempt!
Lifestyle Spending Accounts (LSA) cover many other services and products you can access to live a healthier life, such as: gym memberships, yoga and meditation etc. Money spent from this account is a taxable benefit, meaning you will receive a T4A Form for Canada Revenue Agency (CRA) remittance purposes. You’ll only get taxed on the funds you actually use.
Money spent from your LSA will be taxed according to your marginal income tax rate as per CRA guidelines. Example: if you use $1,500 in LSA funds, and are taxed at 30% marginal income tax rate, then you will pay $450 in taxes.