Canada: Tax relief relating to deferred salary leave plans and pension plans (COVID-19)

Canada: Tax relief, deferred salary leave plans

There are new temporary relief measures for employers that sponsor deferred salary leave plans (DSLPs) or registered pension plans (RPPs) for their employees—relief measures intended to help employers manage and maintain employee benefit obligations throughout the coronavirus (COVID-19) pandemic.


Related content

The relief announced by the Department of Finance is also intended to allow employees who participate in DSLPs to suspend or defer their scheduled leave for a limited time without putting their plans at risk. Notably, this DSLP relief formalizes previously announced administrative relief from the Canada Revenue Agency for the period while the Department of Finance completed its review of the DSLP rules.

The DSLP relief would introduce temporary “stop-the-clock measures” for the period 15 March 2020 to 30 April 2021 so that an employee's DSLP does not need to be terminated if the employee suspends a leave of absence to return to work or the employees choose to delay their paid leave of absence.

The RPP relief would:

  • Temporarily allow RPPs to enter into a loan or a series of loans after April 2020, as long as the loan or series is repaid no later than 30 April 2021
  • Permit retroactive contributions to an employee's money purchase account to replace required contributions that were not made in 2020
  • Broaden the definition of “eligible period of reduced pay” to allow RPPs to recognize full pensionable service for more employees experiencing a period of reduced work and pay during COVID-19

Read a July 2020 report prepared by the KPMG member firm in Canada

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor 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 on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal