CRA issues COVID-19 guidance and reliefs for pensions
Employers with defined contribution (DC) plans are normally required to contribute 1 percent of the total pensionable earnings of all participating active members. However, the CRA has waived this requirement for the remainder of 2020, provided that plan is amended to suspend both employer and employee contributions for the year. To be eligible, DC plans must submit this amendment to the Registered Plans Directorate.
Defined benefit (DB) pension plans are also subject to reliefs. Members who have seen their pay reduced may elect to have the eligible period of reduced pay credited as pensionable service under their plan, as long as they choose to do so by April 30 of the year following the year in which the eligible period of reduced pay ends.
For DB plan members whose eligible periods of reduced pay ended in 2019, the deadline to make this election may be extended to June 1, 2020. Deadlines are currently under discussion between the Department of Finance and the Minister of National Revenue.
The CRA has also continued to update its processes and suspension of activities in light of the pandemic. Suspensions include:
- collections of existing debts, to be reviewed on a case-by-case basis;
- existing requirements to pay for banks and employers; and
- most new audits of small- and medium-sized businesses, unless they are “high risk and exceptional cases.”
The CRA will update its guidance as the COVID-19 situation unfolds.
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