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Bill 213: Making IPPs Better for Small Businesses and Incorporated Professionals in Ontario

Posted under: News, Business Owners, IPP

On December 8, 2020, Bill 213 received Royal Assent by the Ontario Government.  The purpose of Bill 213 is to reduce the burdens of regulation on businesses. Coined the Better for People, Smarter for Business Act, Bill 213 covers off many different facets of regulation in Ontario. One of the major wins for small businesses and incorporated professionals is making Individual Pension Plans (IPPs) exempt from the Provincial Benefits Act (PBA) for plans established for connected members. A connected member is someone who owns 10% or more shares in the corporation or is at non arm’s length to that person.

This is welcome news for small business owners and incorporated professionals with IPPs, as this reduces their administrative burden and costs by no longer having to remit provincial filing fees associated with their plans. The logic that was brought to the attention of the Ontario Ministry of Finance, during consultations ending on January 23, 2020, was that additional oversight on owner-operator plans was unnecessary and costly, as any IPPs terminated in a deficit position, would only impact the owners themselves, rather than an arm’s length employee (non-connected member), where the oversight will still be required.

In addition to the reduced administrative and financial burdens IPP members face, this exemption creates additional funding flexibility and allows IPPs to only be subject to CRA rules. In these uncertain times for many businesses, this is welcome news.   As well, for those looking at establishing IPPs in Ontario, this eliminates barriers to entry, reduces costs, and the administrative headaches often unfairly associated with IPPs.

Bill 213 makes IPPs less complicated and more economical to administer, which is an early holiday gift for many business owners who have had a long nine months of coal in their stockings as a result of the global pandemic.

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