Employee Life and Health Trusts and Health and Welfare Trusts


Employers and Benefit Plan Administrators are faced with a relatively new choice in determining the appropriate vehicle for providing certain employee benefits: should benefits be structured through an Employee Life and Health Trust (“ELHT”) or the historic Health and Welfare Trust (“HWT”)? What are the distinctions and why are they relevant?

The relatively recent introduction of ELHTs resulted in significant uncertainty in the pension benefits industry in Canada. Specifically, much of the concern arose from a lack of clarity as to how the ELHT regime would impact existing trusts operating as HWTs. After commentary from the pension benefits community, legislation from the Department of Finance and interpretive positions being released by the Canada Revenue Agency, the dust has mostly settled and many concerns have subsided. Accordingly, it is a suitable time to revisit the basic features of an ELHT and a HWT, consider the most recent statements of the CRA and compare the tax and other advantages and disadvantages of using an ELHT versus a HWT.

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