Pension Plan Tax Policy Review — What’s in Scope?

Pension Plan Tax Policy Review

Federally-regulated Canadian pension plans may be affected by a government consultation.

Pension Plan Tax Policy Review — What’s in Scope?

Federally-regulated Canadian pension plans that hold controlling interests in businesses may be affected by the results of a new government consultation on tax policy issues. The consultation process, which was recently launched by Finance, is intended to assess:

  • The value of the existing rule that restricts federally-regulated pension plans from holding more than 30% of the voting shares of a company (i.e., the “30% rule”)
  • The tax fairness and economic and market efficiency of the ability of pension plans to reduce or eliminate entity level income tax of businesses in which they hold a controlling interest 
  • Whether existing tax rules such as the specified investment flow-through (SIFT) rules or the thin capitalization rules should be extended to pension-controlled subsidiaries.

If the policy changes are made as a result of this consultation, they could have a major impact on the current investment strategies of Canadian pension plans.

Download this edition of the TaxNewsFlash to learn more [PDF 76.2 KB]

Information is current to June 19, 2016. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

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