Federal Liberals Table 2017 Budget

Bill Morneau has tabled his second budget as Liberal Finance Minister. While there is little new with respect to retirement and pension plans, there are some items that are of interest to employers and benefit plan sponsors and administrators.

Changes In EI Benefits

With respect to benefits under the Employment Insurance Act, the budget proposes:

• that parents can choose to receive Employment Insurance (EI) parental benefits for up to 18 months, but at a benefit rate lowered from the current 55 per cent of average weekly earnings to 33 per cent
• that mothers can choose to start EI maternity benefits up to 12 weeks (from the current eight) before their due date, though this does not affect the total period of maternity leave
• a new EI caregiving benefit of up to 15 weeks
• additional flexibility to share critically ill child care benefits with more family members.

The government will also amend the Canada Labour Code to protect the jobs of any federally regulated employees who take these new or extended periods of EI leave. However, provincial employment standards legislation may also have to be amended before provincially regulated employees are similarly protected.

Flexible Work Arrangements

The government maintains its commitment to amend the Canada Labour Code to enable federally regulated employees to negotiate flexible work arrangements, such as flexible start and finish times and the ability to work from home.

New Leaves

Though it provides few details, the budget proposes to add several new unpaid leaves protected under the Canada Labour Code for:

• family responsibility
• participation in traditional indigenous practices
• seeking care because of family violence

The flexibility of the current bereavement leave will also be increased.

Fertility-Related Medical Costs

The budget proposes that the application of the Medical Expense Tax Credit (METC) will be clarified so that individuals who require medical intervention to conceive a child are eligible to claim the same expenses that would generally be available for individuals on account of infertility.

Accessibility for People with Disabilities

The budget renewed the government’s commitment to develop federal accessibility legislation and remove barriers for disabled Canadians in areas of federal jurisdiction.

Use of Private Corporations for Tax Planning

To try to curb the use of private corporations to, in the government’s view, unfairly reduce taxes for high income earners, the budget proposes that the government will release a policy paper to look at how private corporations can be used to:

• shift income from high income earners to lower income family members
• hold passive investment portfolios to take advantage of lower corporate tax rates
• convert income to capital gains which are taxed at a lower rate

Home Relocation Loan Deduction

The government intends to eliminate the deduction that employees can currently receive for home relocation loans.

Electronic Distribution of T4 Information Slips

Beginning in 2017, the government intends to allow employers to send T4 slips to active employees without requiring their express consent (as is the case now). The employer will have to have sufficient privacy safeguards in place (specifics of which will be determined by the Minister of National Revenue) and will still have to send paper copies if the employee requests.

Simon Laxon (LL.B.) is a senior consultant at Willis Towers Watson.