The Department of Finance Canada has released draft legislation amending the Income Tax Act to address Employee Life and Health Trusts. The legislation would give legislative effect to most of the CRA’s current administrative guidelines for Health and Welfare Trusts and clarify the tax treatment for trusteed benefit plans. However, the legislation also contains proposals which, while they attempt to address perceived abuses, would, in CALU’s opinion, discourage the use of ELHTs in the small business sector, to the detriment of employees and employers. CALU’s submission identifies these concerns and suggests solutions to these problems.

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