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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.


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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

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