Client Advisory Bill C-30, federal budget bill introduced - Willis Towers Watson
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Client Advisory
Bill C-30, federal budget bill introduced
June 10, 2021
Summary
Bill C-30, Budget Implementation Act, 2021, No. 1 has been introduced. It sets out several
measures introduced in the 2021 federal Budget but also some measures announced prior to
the Budget. This Advisory considers some of the measures with respect to health and benefits,
pensions and retirement, and rewards.
The federal government introduced Bill C-30, Budget Implementation Act, 2021, No. 1, which is now
at Second Reading. If passed as currently drafted, it will amend various statutes and regulations to
implement some of the measures announced in last month’s federal Budget (see our April 20, 2021
Client Advisory). It would also make amendments with respect to several other measures announced
before the budget, many of which were first announced in the 2019 Budget (see our March 20, 2019
Client Advisory). Some measures in the 2021 Budget are not contained in Bill C-30 and will have to
be introduced in a later bill or bills. Below we set out the key amendments relating to health and
benefits, pensions and retirement, and rewards.
Health and benefits
Employment Insurance special benefits
The maximum number of weeks during which Employment Insurance sickness benefits (i.e., for
illness, injury or quarantine) can be received will increase to 26 weeks, from 15. The government has
not yet set the date when these changes come into force, though the Budget noted that it will be
sometime in 2022. As well, the government has not yet provided any further details as to when it will
launch the consultations, announced in the 2021 budget, on possible changes to the EI Premium
Reduction Program.
From September 26, 2021 to September 24, 2022, the number of hours of employment needed to
qualify for EI benefits, including special benefits, will be 420. This is an increase from the temporary
requirement of 120 hours that is in place until September 25, 2021.
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willistowerswatson.comCanada Recovery Benefits
Effective June 19, 2021, the maximum number of weeks that benefits are payable will increase for:
▪ Canada Recovery Caregiving Benefit (i.e., benefits for caring for a child under 12 or other family
member for reasons relating to COVID-19) to 42 weeks, from 38
▪ Canada Recovery Benefit (i.e., benefits with respect to loss of employment) to 50 weeks, from
38. The first four weeks of the additional period will be paid at $500 per week, with the remaining
eight paid at $300 per week. After July 17, 2021, benefits for any new claimants will be paid at
$300 per week.
Leaves for federally regulated employees
The following leave provisions under the Canada Labour Code (i.e., for employees in federally
regulated industries such as banking, communication, and airlines) will be amended:
▪ Effective June 19, 2021, the maximum number of weeks of leave to care for a child because of
reasons relating to COVID-19, will increase to 42 weeks, from 38
▪ Effective on the same day that the period of EI sickness benefits increases to 26 weeks, the
maximum number of weeks to take medical leave will increase to 27 weeks, from 17
▪ Effective on Royal Assent, for death or disappearance of a child leave:
▪ the maximum length of leave for a parent of a child who has disappeared will increase to 104
weeks, from 52
▪ the definition of the child who has died or disappeared will include any child under 25
(currently the child must be under 18)
Employee life and health trusts
Several amendments, which are substantially the same as legislative proposals announced in
November 2020, will be made to the employee life and health trust (ELHT) provisions under the
Income Tax Act, including:
▪ Facilitating the conversion of existing health and welfare trusts to ELHTs
▪ Modifying the special deductibility rules for certain plans
▪ Allowing an ELHT to provide for all or substantially all the cost of designated benefits (that is,
allowing an ELHT to pay for some benefits not otherwise allowed)
▪ Improving the operation of the ELHT rules
▪ Relaxing the restrictions under which “key employees” may participate in an ELHT
These amendments will be retroactively effective as of February 27, 2018. As well, collectively
bargained health and welfare trusts will be deemed to be an ELHT until the plans are renegotiated or
at the latest, the end of 2022.
As Finance Canada noted when the legislative proposals were released, the administrative rules with
respect to Health and Welfare Trusts have been extended until the end of 2021.
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willistowerswatson.comNational Pharmacare There are no further details with respect to when the government is going to move forward to create the National Pharmacare program. Pensions and retirement Unclaimed pension benefits An administrator (or, with the Superintendent’s approval, the plan’s fund trustee or custodian) of a terminated federally regulated pension plan will, with the Superintendent’s consent, be permitted to transfer assets relating to the pension benefit credit of unlocated members to the Bank of Canada. A transfer may also be permitted in other circumstances if set out under the regulations and either the Superintendent’s conditions are met or the Superintendent consents. Such transfer will satisfy the plan’s obligation towards the unlocated member who, if later located, can make a claim to the Bank of Canada for the lump sum value of their entitlements under the plan. As well, amendments to the Bank of Canada Act will authorize the Bank of Canada to publish information on its website to assist the public in locating unclaimed assets. The government must fix the date when these changes come into force. Negotiated contribution plans Federally regulated negotiated contribution plans will be required to adopt a funding policy and governance policy (existing plans have a year to do so). As well, the void amendment rule is amended to limit the current test regarding the solvency ratio to plans other than negotiated contribution plans and to empower the government to make regulations that set requirements as to whether an amendment to a negotiated contribution plan is void. The government must fix the date when these changes come into force. Income tax changes The Income Tax Act and regulations will be amended, retroactive to January 1, 2020, to set out the rules for advanced life deferred annuities and variable payment life annuities (see our March 20, 2019 Client Advisory for further details). As well, pensionable service transfers to individual pension plans will be restricted (retroactive to March 19, 2019), and contributions to a specified multi- employer plan will be prohibited for members after the year they turn 71 (with respect to collective agreements entered into after 2019). Old Age Security Beginning July 1, 2022, OAS benefits payable to an individual will increase by 10% beginning the month after the month that individual becomes 75 years of age. As well, Bill C-30 authorized the $500 lump sum payment, announced in the 2021 Budget, to anyone who will be 75 or older as of June 30, 2022. Copyright © 2021 Willis Towers Watson. All rights reserved. 3 willistowerswatson.com
Rewards
Stock options
The Income Tax Act and its regulations will be amended to set the annual maximum benefit of the
employee stock option deduction for employees of certain employers at $200,000 (previously
unlimited), which will apply to options granted on or after July 1, 2021. Gains on option grants above
the $200,000 limit will be taxed as regular employment income. There will be no cap on the annual
maximum deduction for Canadian-controlled private corporations (CCPCs) and for non-CCPCs with
annual gross revenue of $500 million or less.
Canada Emergency Wage Subsidy (CEWS)
The CEWS provisions under the Income Tax Act will be amended to:
▪ Revise the CEWS eligibility criteria and subsidization level
▪ Extend the CEWS until September 25, 2021, with the ability to re-extend it to November 30,
2021
▪ Ensure benefits for furloughed employees continue to align with Employment Insurance benefits
until August 28, 2021
▪ Restrict executive compensation increases at publicly listed firms that receive the CEWS
Canada Recovery Hiring Program
The Canada Recovery Hiring Program, a new program under the Income Tax Act will provide
financial assistance to eligible employers that continue to experience qualifying declines in revenues
relative to before the pandemic. The proposed subsidy would offset a portion of the extra cost
employers take on as they reopen, either by increasing wages or hours worked, or hiring more staff.
This will be effective on Royal Assent.
Federal minimum wage
A minimum wage for federally regulated employees will be established at $15 per hour, with annual
increases based on the Consumer Price Index. However, the federal minimum wage cannot be lower
than the minimum wage in the province or territory where the federally regulated employee works.
This measure will take effect six months after Royal Assent.
Equity in the federal public service
The Public Service Employment Act will be amended to facilitate an evaluation of potential biases or
barriers in hiring that disadvantage persons belonging to equity-seeking groups (defined as “a group
of persons who are disadvantaged on the basis of one or more prohibited grounds of discrimination
within the meaning of the Canadian Human Rights Act”) in the recruitment and promotion process,
and when conducting audits and investigations. In addition, permanent residents will receive the
same preference as Canadian citizens for externally advertised appointments. Most of these
amendments will take effect on Royal Assent.
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willistowerswatson.comFor more information This Advisory is not intended to constitute or serve as a substitute for legal, accounting, actuarial or other professional advice. For information on how this issue may affect your organization, please contact your Willis Towers Watson consultant, or: Christiane Bourassa, +1 514 982-2666 christiane.bourassa@willistowerswatson.com Carole Goyette, +1 514 360 4800 carole.goyette@willistowerswatson.com Simon Laxon, +1 416 960 2621 simon.laxon@willistowerswatson.com Evan Shapiro, +1 416 960 2846 evan.shapiro@willistowerswatson.com Lyle Teichman, + 416 960-2815 lyle.teichman@willistowerswatson.com Paul Timmins, +1 416 960 7400 paul.timmins@willistowerswatson.com Ming Young, +1 416 960 7125 ming.young@willistowerswatson.com About Willis Towers Watson Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com. Copyright © 2021 Willis Towers Watson. All rights reserved. 5 willistowerswatson.com
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