March 2023
The 2023 federal budget and your total rewards offering
The federal budget released on March 28, 2023, contains some measures that could have a direct or indirect impact on an organization’s total rewards offering. Our experts have put together a watch list in light of the available information.
By the end of this year, the federal government will roll out a dental care plan for uninsured Canadian families earning less than $90,000. Canadians with a family income of less than $70,000 will have no co-pays.
You will recall that the federal government had introduced the interim Canada Dental Benefit in 2022 to cover dental care for children whose parents had a family income of less than $90,000. The tabled budget makes the coverage available to a broader population.
More details are expected by the end of the year. Our experts will then be able to measure the potential impact on private plan sponsors.
Budget 2023 provides continuity from the 2022 budget with the confirmation of some flagship measures, including the implementation of the First Home Savings Account (FHSA) as of April 1, 2023, and the commitment to set up a legislative framework in the near future for dynamic pension pools (variable payment life annuities). This measure targets the pension plans of federally regulated organizations in fields such as banking, telecommunications and transportation.
New measures include:
- Added flexibility in the use of education savings, particularly by increasing the maximum limit for some withdrawals from the Registered Education Savings Plan (RESP) from $5,000 to $8,000 for the first 13 consecutive weeks of enrolment during a 12-month period for full-time students.
- Added oversight of federally regulated pension plans, with the requirement to disclose their exposure to cryptocurrencies.
- A tax treatment correction for retirement compensation arrangements secured via a letter of credit. As a reminder, retirement compensation arrangements are financial arrangements that enable employers to finance supplementary retirement benefits for their high-salaried employees. Sponsors of these plans will welcome this correction.
Lastly, as part of its efforts to reduce greenhouse gas emissions (40% to 45% reduction in emissions below 2005 levels by 2030), the government proposes expanding eligibility for clean energy tax credits, particularly with the introduction in 2024 of a 30% interim investment credit for cleantech manufacturing. This incentive could have favourable effects for eligible Canadian companies that find themselves in investment fund-heavy pension fund portfolios. In the same vein, further to the announcement in last year’s budget, some clarifications have been made regarding the Investment Tax Credit for Carbon Capture, Utilization, and Storage to reduce emissions and support the job market in high-emission sectors (an estimated $520 million in costs over five years).
Although the main aim of this budget is to mitigate the effects of inflation, it also includes a number of measures on working conditions and support for the Canadian workforce. Various amendments are proposed to the Canada Labour Code, notably prohibiting the use of replacement workers during a strike or lockout, creating a new leave for workers who experience a pregnancy loss and improving eligibility for leave related to the death or disappearance of a child. In addition, the budget proposes doubling the maximum Tradespeople’s Tool Deduction from $500 to $1,000 starting in the 2023 tax year.
We noted that the budget proposes a number of measures and programs aimed at promoting diversity and inclusion and at fighting racism in the federal public service and in organizations in Canada that provide services to Canadian women and equity-deserving groups. It also includes multiple measures to continue supporting Indigenous communities and other measures fostering the inclusion of people with a disability.
Would you like more information? Contact your Normandin Beaudry expert or email us.