Special Notice
March 23, 2017
2017 Federal Budget:
More flexibility for caregivers,
minor news on pensions
T
he 2017 Federal Budget, Building a Strong Middle Class (Budget),
was tabled by Finance Minister Bill Morneau on March 22, 2017.
As with the 2016 Budget, the focus was on middle class growth, as
well as innovation, skills development and job creation.
While the Budget was notably silent on pension topics – including
next steps for reform of the Canada Pension Plan – it did contain
some announcements of interest to employers and benefits plan
sponsors, including:
• changes to employment insurance (EI) benefits to improve
flexibility for claimants, including a new EI caregiver benefit;
• a new, streamlined Canada Caregiver Credit;
• changes to the Canada Labour Code offering greater flexibility
for federally regulated employees;
• dedicated healthcare funding for home care and mental health;
• changes to the treatment of fertility expenses for the medical
expense tax credit (METC); and
• an update on the Canada Infrastructure Bank (CIB).
This Special Notice provides a summary of key Budget measures
and their impact on employers and plan sponsors.
1 | A MEMBER OF ABELICA GLOBAL
Special Notice
Changes to EI benefits
To better support caregivers, the Budget proposes creating a new
EI caregiver benefit – backed by over $691 million in funding over
five years starting in 2017/18, and $168 million per year thereafter.
Up to 15 weeks of leave will be available in a broad range of
situations where individuals provide care to an adult family member
who requires significant support to recover from a critical illness
or injury. Unlike existing EI compassionate care leave benefits, the
loved one does not need to be gravely ill and at significant risk
of death (or critically ill or injured, in the case of a child) for the
caregiver to be eligible.
The Budget also contains proposals to make EI parental and
maternity benefits more flexible by:
•
letting parents choose between receiving EI parental benefits for up
to 12 months at 55% of average weekly earnings, or up to 18 months
at 33% of average weekly earnings; and
•
allowing women to claim EI maternity benefits up to 12 weeks
before their due date instead of the current eight weeks.
Eckler’s view: Here are some of the main considerations for
employers and plan sponsors:
•
The new caregiver benefit providing for up to 15 weeks
adds another category of leave for employers to manage.
The regulations will hopefully provide greater clarity on
what constitutes a critical illness or injury.
•
Since these are federal regulations, provincial employment
standards legislation will not completely align with the
proposed extended EI benefit period – at least not initially.
•
Many existing HR programs, such as vacation, are based on
annual accruals, so employers may need to consider policy
changes to integrate with a possible 18-month leave.
•
Parental leave top-up benefits are discretionary.
Employers offering such leaves should review their current
policies and consider adjusting top-up payments and/or
periods in light of these new options.
•
The health-related portion of STD benefits (usually six
to eight weeks) during which a woman may be eligible
for disability benefits, if the disability is related to the
maternity, should not be impacted by these changes.
However, disability plan costs may be increased when paid
as a top-up benefit when the EI benefit is lowered to 33%,
subject to the final regulations on the maximum benefit.
2 | 2017 FEDERAL BUDGET
Special Notice
Modernized caregiver benefits
Canadian caregivers currently face a confusing
tax system made up of three credits – the
Caregiver Credit, the Infirm Dependant Credit
and the Family Caregiver Tax Credit – with
different eligibility rules. To simplify the system
and better serve families, the Budget proposes
replacing the current credits with a new Canada
Caregiver Credit (CCC).
The CCC is a non-refundable credit available to
caregivers regardless of whether they live with
the family member needing care. The credit will
provide tax relief on the following amounts:
•
•
$6,883 (in 2017) for expenses related
to caring for dependent relatives with
infirmities – parents, brothers and sisters,
adult children and other specific relatives
(including persons with disabilities); and
Canada Labour Code changes
– more flexibility for federally
regulated Workers
To help federally regulated employees better
balance work and family responsibilities, the
Budget proposes several amendments to the
Canada Labour Code, including:
•
giving employees the right to request
flexible work arrangements from their
employer, such as flexible start and finish
times, and the ability to work from home;
•
introducing new unpaid leaves of absence
– including family responsibility leave, leave
to participate in traditional Indigenous
practices and leave for victims of family
violence to seek care; and
•
amending bereavement leave provisions to
make them more flexible.
$2,150 (in 2017) for expenses related to
caring for a dependent spouse/commonlaw partner or minor child with an infirmity
(including those with disabilities).
Eckler’s view: The Budget proposals are
limited to federally regulated employees;
however, several provinces already provide
family responsibility leave and/or domestic
violence leave. Eckler will monitor other
jurisdictions to determine whether they
will follow the federal government’s lead
in introducing Indigenous practices leave
and/or modernizing bereavement leave.
The income threshold for phasing out the credit
is higher than the current three credits. CCC
reduction will start when the dependent’s net
income is above $16,163 (in 2017). This income
threshold, along with the credit amounts, will be
indexed to inflation for taxation years after 2017.
Eckler’s view: The CCC could be available
to families as soon as the 2017 tax year.
Eckler does not anticipate this new
benefit will have a major impact on
benefit plan costs.
3 | 2017 FEDERAL BUDGET
Healthcare funding
The Budget promises investments of $6 billion
over 10 years in home care, and $5 billion over 10
years in mental health initiatives. This funding is
expected to:
•
improve access to home, community and
palliative care services;
•
provide more support for informal
caregivers; and
•
provide better access to mental health
support for as many as 500,000 young
Canadians under age 25.
Special Notice
The funding will include reporting to ensure any
new investments translate into improved health
outcomes for Canadian families.
Eckler’s view: Given the high cost of
mental health to the Canadian economy
(an estimated $50 billion annually) and
to employers (more than $6 billion in
lost productivity in 2011), funding that
produces measurable improvements in
mental health is good news. Improved
access to mental health support could
translate into higher productivity and
lower absenteeism for employers.
Medical Expense Tax Credit
(METC) and fertility-related
expenses
The Budget clarifies that the METC applies
to fertility expenses. Individuals who require
medical intervention to conceive (e.g., single
individuals and same-sex couples) can claim the
same expenses as individuals facing medical
infertility. This measure will apply to 2017 and
subsequent taxation years.
Eckler’s view: The impact on plan
sponsors will depend on whether fertility
drugs are eligible under their medical
plans, whether the insurer/adjudicator
has any coverage restrictions on “medical
necessity” and on the potential expanded
list of eligible employees/partners. Overall,
Eckler expects the impact on benefit plans
will be negligible, although there could
be increased exposure for healthcare
spending accounts.
4 | 2017 FEDERAL BUDGET
Canada Infrastructure Bank
The 2016 Fall Economic Statement included
an announcement to establish the Canada
Infrastructure Bank (CIB) – an arm’s length
organization that will work with provincial,
territorial, municipal, Indigenous and private
sector investment partners to change how
Canada plans, funds and delivers infrastructure.
The CIB will be responsible for investing at
least $35 billion over 11 years using loans, loan
guarantees and equity investments – with a
focus on large, transformative projects such as
regional transit plans, transportation networks
and electricity grid interconnections.
It’s expected the CIB will be operational in late
2017. To that end, the government will table
legislation to establish the bank, and will begin
the process of choosing its CEO and Chair of the
Board of Directors.
The CIB and federal government will work with
Statistics Canada – along with the provinces,
territories and municipalities – on an ambitious
initiative to improve how municipalities
track, collect, use and share the data needed
to measure the impact of infrastructure
investments. This initiative will help all levels of
government by providing intelligence to better
direct infrastructure funding. Further details will
be announced in the coming months.
Eckler’s view: Many pension plans have
exposure to Canadian infrastructure in
their investment portfolios to diversify
their holdings and earn additional
return. This is a positive sign that the
infrastructure market continues to grow
and mature – with significant policy
support from the government. Ultimately,
the proposed CIB could positively
impact the availability of infrastructure
investments in Canada.
Special Notice
Other measures
The Budget also made the following announcements:
•
End of Canada Savings Bonds: Due to declining popularity –
attributed to the proliferation of higher-yielding alternative retail
investment instruments like GICs – the Government of Canada
will discontinue the sale of new Canada Savings Bonds in 2017.
•
Anti-Avoidance Rules for RESPs and RDSPs: Many tax-assisted
registered plans – such as RRSPs, Registered Retirement Income
Funds and Tax-free Savings Accounts – are subject to antiavoidance rules to help ensure they do not provide excessive
tax advantages. To improve the consistency of the tax rules
applicable to investments held in registered plans, the Budget
proposes extending several anti-avoidance rules to Registered
Education Savings Plans (RESPs) and Registered Disability
Savings Plans (RDSPs) as well. Subject to limited exceptions, the
new rules will apply to transactions occurring – and investments
acquired – after March 22, 2017. These proposals likely will not
have an impact on the majority of RESP and RDSP holders, who
typically invest in ordinary portfolio investments.
•
Disability Pensions Return for Veterans: The government
continues to work toward reintroducing the option for injured
veterans to receive their disability award through a monthly
lifetime pension, instead of just a lump sum. Further details are
expected later this year.
•
GST/HST Exemption for Naloxone: Naloxone – used to treat
opioid overdoses – qualified for GST/HST relief when it was only
available by prescription. However, this relief was lost on March
22, 2016, when Health Canada made the drug available without
a prescription if indicated for emergency use to treat overdoses
outside of hospital settings. To address this, the Budget adds
Naloxone to the list of GST/HST-free non-prescription drugs
used to treat life-threatening conditions, effective March 22, 2017.
•
Nurse Practitioners Can Issue DTC Certifications: The Budget
adds nurse practitioners to the list of medical practitioners who
can certify the impacts of impairments for Disability Tax Credit
(DTC) applicants, applicable to DTC certifications made on or
after March 22, 2017.
This Special Notice has been prepared for general information purposes only and does not constitute professional advice.
Should you require professional advice based on the contents of this Notice, please contact an Eckler consultant.
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| 2017 FEDERAL
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