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Extension of Health and Welfare Trusts

Published on January 4, 2021

Health and Welfare Trusts (HWTs) have enabled small business owners to provide health care incentives to employees of small and owner/managed businesses with minimal cost.  In the 2018 federal budget, it was announced that the CRA would no longer apply its administrative rules with respect to HWTs after the end of 2020. 

In November 2020, the Department of Finance and the CRA announced a one-year extension to those administrative rules.  Accordingly, the CRA will apply its administrative tax rules for HWTs until the end of 2021 to permit additional transition time.  Note that prior to 2022, the HWT will need to convert to an Employee Life and Health Trust or be wound up; though if certain conditions are met the deadline is extended until December 31, 2022.  For more information please see the link below or contact our office.   
 
https://www.canada.ca/en/department-finance/news/2020/11/draft-legislative-proposals-for-employee-life-and-health-trusts.html