Income Tax Regulations (C.R.C., c. 945)

Multi-employer Plans and Other Special Plans

Definition of Multi-employer Plan

• 8510 (1) The definition multi-employer plan in subsection 8500(1) is applicable for the purposes of subsection 147.1(1) of the Act.

Definition of Specified Multi-employer Plan

• (2) For the purposes of this Part and subsection 147.1(1) of the Act, specified multi-employer plan in a calendar year means a pension plan

  • (a) in respect of which the conditions in subsection (3) are satisfied at the beginning of the year (or at the time in the year when the plan is established, if later),

  • (b) that has, on application by the plan administrator, been designated in writing by the Minister to be a specified multi-employer plan in the year, or

  • (c) that was, by reason of paragraph (a), a specified multi-employer plan in the immediately preceding calendar year (where that year is after 1989),

  but does not include a pension plan where the Minister has, before the beginning of the year, given notice by registered mail to the plan administrator that the plan is not a specified multi-employer plan.

Qualification as a Specified Multi-employer Plan

• (3) The conditions referred to in paragraph (2)(a) are the following:

  • (a) it is reasonable to expect that at no time in the year will more than 95 per cent of the active members of the plan be employed by a single participating employer or by a related group of participating employers;

  • (b) where the year is 1991 or a subsequent year, it is reasonable to expect that

    • (i) at least 15 employers will contribute to the plan in respect of the year, or

    • (ii) at least 10 per cent of the active members of the plan will be employed in the year by more than one participating employer,

    and, for the purposes of this condition, all employers who are related to each other shall be deemed to be a single employer;

  • (c) employers participate in the plan pursuant to a collective bargaining agreement;

  • (d) all or substantially all of the employers who participate in the plan are persons who are not exempt from tax under Part I of the Act;

  • (e) contributions are made by employers in accordance with a negotiated contribution formula that does not provide for any variation in contributions determined by reference to the financial experience of the plan;

  • (f) the contributions that are to be made by each employer in the year are determined, in whole or in part, by reference to the number of hours worked by individual employees of the employer or some other measure that is specific to each employee in respect of whom contributions are made to the plan;

  • (g) the administrator is a board of trustees or similar body that is not controlled by representatives of employers; and

  • (h) the administrator has the power to determine the benefits to be provided under the plan, whether or not that power is subject to the terms of a collective bargaining agreement.

Minister’s Notice

• (4) For the purpose of subsection (2), the Minister may give notice that a plan is not a specified multi-employer plan only if the Minister is satisfied that participating employers will be able to comply with all reporting obligations imposed by Part LXXXIV in respect of the plan if it is not a specified multi-employer plan, and

  • (a) the notice is given at or after a time when the conditions in subsection (3) are not satisfied in respect of the plan; or

  • (b) the plan administrator has applied to the Minister for the notice.

Special Rules — Multi-employer Plan

• (5) Where a pension plan is a multi-employer plan in a calendar year,

  • (a) each member of the plan who is connected at any time in the year with an employer who participates in the plan shall be deemed, for the purposes of applying the conditions in sections 8503 and 8504 in respect of the plan in the year and in each subsequent year, not to be so connected in the year;

  • (b) paragraph 8503(3)(b) shall, in its application in respect of benefits provided under a defined benefit provision of the plan in respect of a period in the year, be read without reference to subparagraph (ii) thereof; and

  • (c) the condition in paragraph 8503(3)(k) and the rule in subsection 8504(8) shall apply in the year in respect of the plan without regard to benefits provided under any other pension plan.

Special Rules — Specified Multi-employer Plan

• (6) Where a pension plan is a specified multi-employer plan in a calendar year,

  • (a) a contribution that is made in the year in respect of a defined benefit provision of the plan by an employer with respect to the employer’s employees or former employees in accordance with the plan as registered shall be deemed, for the purpose of paragraph 8502(b), to be an eligible contribution;

  • (b) subparagraph 8502(c)(i) shall, in its application in the year in respect of the plan, be read as follows:

    • “(i) benefits that are in accordance with subsection 8503(2), paragraphs 8503(3)(c), (e) and (g) and subsections 8504(5) and (6)”

  • (c) the conditions in paragraphs 8503(3)(j) and (4)(a) do not apply in the year in respect of the plan; and

  • (d) a payment made in the year under a defined benefit provision of the plan with respect to a member is deemed to comply with the conditions in paragraph 8503(2)(h) (in the case of a payment made in connection with the member’s termination from the plan otherwise than by reason of death) or (j) (in the case of a payment made after the death of the member) where it would comply if paragraph 8503(2)(h) were read as follows:

    • “(h) the payment, with respect to a member in connection with the member’s termination from the plan (otherwise than by reason of death), of one or more single amounts where

      • (i) the payments are the last payments to be made under the provision with respect to the member, and

      • (ii) each single amount does not exceed the amount that would be the balance in the member’s net contribution account immediately before the time of payment of the single amount if, for each contribution that is a specified contribution, the account were credited at the time of the specified contribution with an additional amount equal to the amount of the specified contribution and, for this purpose, a specified contribution is

        • (A) a contribution included in determining a pension credit of the member under the provision because of paragraph 8301(5)(b), or

        • (B) a contribution made before 1990 in respect of the provision by a participating employer, to the extent that the contribution can reasonably be considered to have been determined by reference to the number of hours worked by the member or some other measure specific to the member;

Additional Prescribed Conditions

• (7) Where a pension plan is a specified multi-employer plan in a calendar year, the prescribed conditions for the registration of the plan include, in that year, the following conditions:

  • (a) when employer and member contribution rates under the plan were last established, it was reasonable to expect that, for each calendar year beginning with the year in which the contribution rates were last established,

    • (i) the aggregate of all amounts each of which is the pension credit of an individual for the year with respect to an employer under a benefit provision of the plan

    would not exceed

    • (ii) 18 per cent of the aggregate of all amounts each of which is, for an individual and an employer where the pension credit of the individual for the year with respect to the employer under a benefit provision of the plan is greater than nil, the compensation of the individual from the employer for the year,

    except that this condition does not apply for years before 1992 in the case of a pension plan that is a grandfathered plan;

  • (b) where the plan contains a money purchase provision,

    • (i) the plan terms are such that, if subsection 147.1(9) of the Act were applicable in respect of the plan, the plan would not under any circumstances become a revocable plan at the end of the year pursuant to that subsection, or

    • (ii) if the plan terms do not comply with the condition in subparagraph (i), the only circumstances that would result in the plan becoming a revocable plan at the end of the year pursuant to subsection 147.1(9) of the Act, if that subsection were applicable in respect of the plan, are circumstances acceptable to the Minister; and

  • (c) no contributions are made

    • (i) to the plan with respect to a member at any time after the end of the calendar year in which the member attains 71 years of age, or

    • (ii) to a defined benefit provision of the plan with respect to a member during a period (other than a qualifying period, as defined in subsection 8503(16)) in which the member is in receipt of retirement benefits from a defined benefit provision of the plan.

Purchase of Additional Benefits

• (8) Where, in the case of a pension plan that is a specified multi-employer plan in a calendar year,

  • (a) the amount of lifetime retirement benefits provided under a defined benefit provision of the plan to each member is determined by reference to the hours of employment of the member with participating employers,

  • (b) the plan permits a member whose actual hours of employment in a period are fewer than a specified number of hours for the period to make contributions to the plan in order to increase, to an amount not exceeding the specified number of hours for the period, the number of hours that are treated under the provision as hours of employment of the member in the period, and

  • (c) the specified number of hours for a period does not exceed a reasonable measure of the actual hours of employment of members who render services throughout the period on a full-time basis,

  the condition in paragraph 8503(3)(a) does not apply in respect of such portion of the lifetime retirement benefits provided under the provision to a member as is determined by reference to hours acquired by the member as a consequence of contributions made to the plan in the year by the member, as described in paragraph (b).

Special Rules – Member-funded Pension Plans

• (9) Where a pension plan (other than a specified multi-employer plan) is a member-funded pension plan for the purposes of Division IX of the Regulation respecting the exemption of certain categories of pension plans from the provisions of the Supplemental Pension Plans Act of Quebec (R.Q., c. R.-15.1, r. 2), as amended from time to time,

  • (a) paragraph 8502(c) shall in its application in respect of the plan be read without reference to subparagraph (iii);

  • (b) the prescribed conditions for the registration of the plan include the following conditions:

    • (i) the plan terms are such that each contribution to be made by a member under a defined benefit provision of the plan would be an eligible contribution under subsection 147.2(2) of the Act if

      • (A) the contribution were made by an employer who participates in the plan for the benefit of the member, and

      • (B) this subsection were read without reference to paragraph (c),

    • (ii) unless this condition is waived by the Minister, the plan is maintained pursuant to a collective bargaining agreement,

    • (iii) the plan is not, and it is reasonable to expect that the plan will not become, a designated plan, and

    • (iv) the amount of benefits provided to members, the amount of contributions required to be made by members and the entitlement of members’ to benefit from actuarial surplus are determined in a manner that is

      • (A) clearly established in the plan terms, and

      • (B) not more advantageous for members who, at any time after the plan is established, are specified individuals (within the meaning assigned by subsection 8515(4)) under the plan than for members who are not specified individuals; and

  • (c) a contribution made by an employer to the plan is a prescribed contribution for the purposes of subsection 147.2(2) of the Act if

    • (i) the contribution is a current service contribution that would be an eligible contribution under subsection 147.2(2) of the Act if no contributions were prescribed for the purposes of that subsection and if that subsection were read without reference to its subparagraph (d)(ii), and

    • (ii) the recommendation pursuant to which the contribution is made is such that the current service contributions to be made by the employer do not exceed,

      • (A) where the amount of actuarial surplus in respect of the employer is greater than the amount determined under subparagraph 147.2(2)(d)(ii) of the Act, 50% of the current service contribution that would be required to be made by the employer if there were no actuarial surplus under the provisions, and

      • (B) in any other case, the current service contributions that would be required to be made by the employer if there were no actuarial surplus under the provisions.

Conditions Applicable to Amendments

• 8511 (1) For the purposes of paragraph 147.1(4)(c) of the Act, the following conditions are prescribed in respect of an amendment to a registered pension plan:

  • (a) where the amendment increases the accrued lifetime retirement benefits provided to a member under a defined benefit provision of the plan, the increase is not, in the opinion of the Minister, inconsistent with the conditions in paragraphs 8503(3)(h) and (i); and

  • (b) where the plan is a grandfathered plan and the amendment increases the bridging benefits provided to a member under a defined benefit provision of the plan, the member’s bridging benefits, as amended, comply with the condition in subparagraph 8503(2)(b)(ii) that would apply if the plan were not a grandfathered plan.

• (2) Where an amendment to a registered pension plan provides for the return to a member of all or a part of the contributions made by the member under a defined benefit provision of the plan, the plan becomes a revocable plan at any time that an amount (other than an amount that may be transferred from the plan in accordance with subsection 147.3(6) of the Act) that is payable to the member as a consequence of the amendment is not paid to the member as soon after the amendment as is practicable.

Registration and Amendment

• 8512 (1) For the purpose of subsection 147.1(2) of the Act, an application for registration of a pension plan shall be made by sending the following documents by registered mail to the Commissioner of Revenue at Ottawa:

  • (a) an application in prescribed form containing prescribed information;

  • (b) certified copies of the plan text and any other documents that contain terms of the plan;

  • (c) certified copies of all trust deeds, insurance contracts and other documents that relate to the funding of benefits under the plan;

  • (d) certified copies of all agreements that relate to the plan; and

  • (e) certified copies of all resolutions and by-laws that relate to the documents referred to in paragraphs (b) to (d).

• (2) Where an amendment is made to a registered pension plan, to the arrangement for funding benefits under the plan or to a document that has been filed with the Minister in respect of the plan, within 60 days after the day on which the amendment is made, the plan administrator shall send to the Commissioner of Revenue at Ottawa

  • (a) a prescribed form containing prescribed information; and

  • (b) certified copies of all documents that relate to the amendment.

• (3) For the purpose of subsection 147.1(4) of the Act, an application for the acceptance of an amendment to a registered pension plan is made in prescribed manner if the documents that are required by subsection (2) are sent by registered mail to the Commissioner of Revenue at Ottawa.