Federal Fall Economic Statement 2023: pensions, benefits and employment changes

On November 21, 2023, the federal government released its 2023 Fall Economic Statement (Statement). The Statement announced several initiatives that will be of interest to employers and pension plan administrators. Additional details about the proposals will be contained in legislation that will be released in the coming weeks and months.

What you need to know

• New protected leaves. Two new job-protected leaves are intended to be added for federally regulated employees: adoption leave and paid leave for employees who experience pregnancy loss.
• Benefits. The proposed exemption of services by psychotherapists and counselling therapists from GST/HST could impact how employees use their group health plans.
• Pension plans. The Statement proposes enhanced investment disclosure requirements and potential changes to the investment rules for federally regulated pension plans.
• Employee ownership trusts. Starting in 2024, the first $10 million in capital gains realized on the sale of a business to an EOT will generally be exempt from tax.

New protected leaves

The government intends to amend the Canada Labour Code (CLC) to add two new job-protected leaves for federally regulated employees: adoption leave and paid leave for employees who experience pregnancy loss.

In connection with the new adoption leave, the government is introducing a new 15-week shareable Employment Insurance (EI) benefit for adoptive or surrogate parents. Currently, adoptive parents can access EI parental benefits, but not the 15 weeks of EI maternity benefits.

While the CLC does not apply to provincially regulated employees, in the past the provinces have often followed suit and amended their minimum employment standards leaves to match the EI program.

Benefits

The Statement proposes to exempt professional services rendered by psychotherapists and counselling therapists from GST/HST. This may lead employees who are covered by group health plans to either make modestly lower claims or be able to access slightly more services within their applicable plan maximums.

The Canadian Dental Care Plan is expected to launch by the end of 2023 for uninsured Canadians who have an annual family net income of less than $90,000. The government will amend the Income Tax Act to provide legislative authority for the Canada Revenue Agency (CRA) to share taxpayer information with an official of Public Services and Procurement Canada (PSPC). This will facilitate the operation of the plan by allowing Employment and Social Development Canada (ESDC) to engage the services of PSPC in administering it.

Pension plans

The government proposes to require large federally regulated pension plans to disclose the distribution of their investments, both by jurisdiction and by asset type per jurisdiction, to the Office of the Superintendent of Financial Institutions (OSFI), which would make it available to the public.

The government also proposes to explore eliminating the “30% rule” for investments in Canada.

The Statement notes that the federal government has been advancing measures to require disclosures of crypto-asset exposures for federally regulated pension plans, and notes its objective of working with the provinces to require similar disclosure requirements regarding crypto-asset risk for all registered pension plans.

Employee ownership trusts

Employee ownership trusts (EOTs) were introduced in the Spring 2023 budget. EOTs are intended as a way for employees to hold an ownership interest in their employer through the trust’s acquisition of that business’ shares, which are held for the benefit of eligible employees. EOTs can also be used by retiring business owners as a way to exit the business. The Statement announced that, starting in 2024, the first $10 million in capital gains realized on the sale of a business to an EOT will be exempt from tax, subject to certain conditions.