i. LEGISLATION
FEDERAL BUDGET BILL PASSED: TAX-FREE FIRST HOME SAVINGS ACCOUNT, REGISTERED INVESTMENTS
Bill C-32, the 2022 Budget Bill, received Royal Assent on December 15, 2022. It will implement, effective April 1, 2023, the new Tax-Free First Home Savings Account (FHSA) to enable prospective first-time home buyers over age 18 to save up to $8,000 in annual contributions, up to a total of $40,000 tax-free toward their first home. It will also amend the definition of “qualified investment” in the Income Tax Act to add FHSAs. Unused amounts can be transferred to an RRSP or withdrawn as a taxable amount.
NEW FEDERAL PAID MEDICAL LEAVE, EFFECTIVE DECEMBER 1, 2022
Effective December 1 ,2022, amendments to the Canada Labour Code entitle employees in federally regulated industries and workplaces to paid medical leave of three days after completing 30 days of continuous service, plus one day for each additional month until a maximum of 10 days per calendar year is reached. The definition of “regular rate of wages” now also applies to paid medical leave for employees with non-standard hours or pay methods. The previous entitlement to five days of personal illness or injury leave was repealed, also effective December 1, 2022.
ENHANCED FEDERAL ENTITLEMENT TO UNPAID MEDICAL LEAVE, EFFECTIVE DECEMBER 18, 2022
Effective December 18, 2022, Employment Insurance sickness benefits can be taken for up to 26 weeks (up from 15). To align with this change, the maximum unpaid medical leave under the Canada Labour Code has also increased, to 27 weeks (from 17).
BILL C-228 UPDATE
Bill C-228, a private member’s bill supported by the government, passed reading in the House of Commons on November 23, 2022, and is currently at the Committee stage in the Senate. If passed, it will amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to extend to a pension deficit the same level of priority that is currently only provided to pension normal costs and employee contributions withheld from pay but not yet remitted to the pension fund. As a result, any deficit relating to a pension plan would have a higher priority than most loans from secured creditors when an employer is insolvent or seeks reorganization. The amendments would take effect four years after Bill C-228 comes into force for an employer with an existing defined benefit pension plan.
ONTARIO BUDGET BILL PASSED: FUNDING AND GOVERNANCE POLICIES
Bill 36, the 2022 Budget Bill, received Royal Assent on December 8, 2022. It amends the Pension Benefits Act to require, first with respect to plans that provide target benefits and subsequently with respect to all pension plans, that the plan administrator file funding and governance policies. The amendments must still be proclaimed into force, after supporting regulations are drafted.
The requirement for all plans that have these policies, , previously passed but not yet enacted (see Bill 177), have been repealed.
The legislation also amends a separate provision setting out the circumstances in which a collective agreement is included as a document that creates and supports a pension plan.
ONTARIO FALL ECONOMIC STATEMENT: TARGET BENEFIT PLANS
Ontario’s 2022 Fall Economic Statement was released on November 14, 2022. It confirms that the government will consult with stakeholders later this year on regulations needed to implement a permanent target benefit framework. Current regulations that allow Specified Ontario Multi-Employer Pension Plans (SOMEPPs) to provide target benefits will expire on January 1, 2024.
Please log in to read the full article.