Register a supplementary unemployment benefit plan - Conditions for registration
2. Conditions for registration
In order for a supplementary unemployment benefit plan (SUBP) to be registered under section 145 of the Income Tax Act by the Canada Revenue Agency (CRA), it must meet certain conditions.
Plan and trust conditions
The following conditions must be met:
- the employer’s contributions must be made to, and benefits must be paid out of, or under a trust. The trust must be a trust in Canada with a fiscal period ending on December 31
- the funds of the trust must only be used for paying benefits to eligible employees who are, or may be, laid off for a temporary or indefinite period. Benefits paid to eligible employees will be included in calculating the employee’s income in the year the benefit is received. The acceptable types of leave that may be covered are:
- temporary lay-off caused by a stoppage of work
- maternity leave
- parental leave
- compassionate care leave
- family caregiver leave
Benefits must not be paid:
- for vacation leave
- on end of employment
- on or after retirement
- to keep, in whole or in part, the employee’s former level of pay when they have been transferred to a new position at a lower level of pay.
- amounts in the trust must be paid to the employer(s) when winding up the plan. These amounts must be included when calculating the employer’s income for the year in which the amounts were received
The plan must not be, in nature or operation, a superannuation, pension, retirement savings, deferred profit sharing, or an employees’ profit sharing plan.
The following plans will not qualify for registration:
- a plan that permits payments to be made out of an operational revenue fund or out of the general operating revenues of a public or private entity to employees or former employees
- a plan that allows contributions to be made to and benefits to be paid from or under a contract for insurance
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