Ontario expands the election to treat funded benefit plans as unfunded for tax purposes, with new ministerial regulation powers

Plain-language summary · AI-assisted · not legal advice

Planholders of funded benefit plans can now elect to have their employer health tax on benefit plan contributions calculated under the unfunded-plan rules (based on benefits paid rather than contributions made). Previously this election was only available to qualifying trusts with excess assets; it is now open to any funded benefit plan planholder. The Minister gains authority to prescribe limitations on which plans may elect, how long elections last, and to make regulations overriding the normal transition rules when an election is made or revoked — including regulations that can apply retroactively. Planholders who think they may benefit from switching to unfunded-plan tax treatment should review whether they qualify and how to file an election in the form and manner the Minister approves. The earlier disclaimer about the consolidation being affected by retroactive provisions has been removed, suggesting the retroactive provisions have now been incorporated.

Who this affects: employers who sponsor funded employee benefit plans · benefit plan administrators · qualifying trust planholders · corporate tax compliance teams