Federal budget: No changes for pension and benefit plans

The 2017 Federal Budget was released on March 22, 2017. There were no changes directly affecting pension plans or employee benefits. However, some changes to Employment Insurance (EI) could eventually result in an impact on some employee benefit plans. Furthermore, it is noteworthy that the tax expenditure review announced in the 2016 Federal Budget did not result in major changes.

Changes to employment insurance

The 2017 Budget proposes to create a new EI caregiving benefit of up to 15 weeks. The new benefit will cover a broad range of situations where individuals are providing care to an adult family member who requires significant support in order to recover from a critical illness or injury. Parents of critically ill children will continue to have access to up to 35 weeks of benefits, with additional flexibility to share these benefits with more family members.

EI parental benefits will become more flexible. Proposed changes will allow parents to choose to receive EI parental benefits over an extended period of up to 18 months at a lower benefit rate of 33 per cent of average weekly earnings. EI parental benefits will continue to be available at the existing benefit rate of 55 per cent over a period of up to 12 months.

Finally, pregnant women will be eligible for EI maternity benefits up to 12 weeks before their due date—expanded from the current standard of 8 weeks—if they so choose.

Results of tax expenditure review

The 2016 Federal Budget announced a review of tax expenditures. There were rumours in 2016 that this review could result in the potential taxation of employee benefit plans. However, the 2017 Federal Budget only included modest changes to tax credits, such as the elimination of the public transit tax credit and the elimination of the deduction in respect of employee home relocations loans, with no direct impact on employee benefit plans.

Healthcare related initiatives

As previously announced and negotiated with the provinces and territories, the Budget promises an additional $6 billion over 10 years to fund home care and $5 billion over 10 years to fund mental health initiatives. The Budget promises better access to mental health support for as many as 500,000 young Canadians under the age of 25.


Conclusion

The 2017 Federal Budget has no direct impact on employee benefit plans, with only a modest indirect impact. It is also notable for the lack of changes to the taxation of employee benefits.


News & Views - April 2017 (PDF)