The CRA may waive the minimum employer contribution requirement for the rest of 2020
The CRA has announced it will waive the 1% minimum employer contribution requirement for money purchase provisions of certain registered pension plans for the remainder of 2020. This relief will only apply to plans that are amended to suspend accruals under the plan for the year, meaning that there will be no employer or employee contributions made to the plan or provision following the plan amendment.
This relief measure was announced on May 5, 2020 and is restricted to plans that submit an amendment to the Registered Plans Directorate.
Under the minimum contribution rule, a money purchase provision requires employers to contribute an amount that is acceptable to the Minister, under paragraph 8506(2)(a) of the Income Tax Regulations. The CRA states that the terms of a money purchase provision must require employers to contribute at least 1% of the total pensionable earnings of all active members participating under the provision in order to be acceptable, under paragraph 10 of its newsletter, no. 91-4R Registration Rules for Money Purchase Provisions. The CRA further clarifies that this minimum contribution rule applies only to a money purchase provision of a registered pension plan where members' benefits are provided exclusively on a money purchase basis.
For more information, contact your KPMG adviser.
Information is current to May 12, 2020. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
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