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2021 Federal Budget: The GBL Perspective

Posted under: News, Business Owners


On April 19th, 2021 Finance Minister Chrystia Freeland presented the 2021 Federal Budget: A Recovery Plan for Jobs, Growth, and Resilience. Unlike many past budgets, this budget was long on measures in regard to spending with little changes to the areas of personal taxes, corporate taxes, RSP and Pension limits, or capital gains taxes.

Of course, this is the first Federal Budget to be tabled since the start of the Covid-19 pandemic, so the focus was on recovery from the financial hardships that have hit many Canadians. As well, with speculation of an upcoming Federal election being called, it is not a shock that there were not many revenue tools being implemented.

From a GBL focus, there were little to no changes within this budget. For IPPs, there are no changes to limits, past service calculations, or to any of the assumptions used in the plans. The only section applying to IPPs was a confirmation that measures introduced in the 2019 Federal Budget pertaining to the transfer of a commuted value to an unrelated IPP will be moving forward.  Previously, if an individual left a company and had an existing pension plan, the entire commuted value could transfer tax deferred to an IPP if the individual started a new business and set up the IPP within it.  Since this rule was previously announced it came as no surprise; and the number of potential future IPPs that could be realistically impacted is extremely low.

Otherwise, we see no new changes to Retirement Compensation Arrangements (RCAs), Health Benefit Plans (HBPs) or the valuation of life insurance.  Changes were previously announced for Health and Welfare Trusts, which led to the creation of GBL’s non-trusted Health Benefit Plan which is similar to a Health and Welfare Trust as it allows for employers to deduct employee health expenses without the employee receiving a taxable benefit.

It would not be a surprise if we saw a post-election update or more tax measures in 2022, but for now the focus is on recovery and many of the tax changes that were predicted have not come to fruition.

We are here to help with any questions you may have.  Feel free to reach out to your GBL consultant, or info@gblinc.ca should you have any questions regarding the impacts on your pension plan.

Founded in 1995, GBL is a leading provider of retirement, health, and cross-border solutions for business owners across Canada. With offices in Calgary and Toronto, we have served 6,000+ clients, have 3,000+ Financial/Investment Advisors in our network, actively manage 2,000+ IPPs and RCAs, and have created 1,000+ HBPs and 3,000+ FMVs. We’re known for our industry leading client service and administration, as well as our top-notch actuarial group. Contact us today at  info@gblinc.ca or 403.249.1820 and follow us to learn how we can help Build Your Future.