The 2018 Federal Budget announced that Health and Welfare Trusts (“HWTs”) will need convert to Employee Life and Health Trusts (“ELHTs”) or windup by the end of 2020. This change was proposed so that only one set of tax rules, those in the Income Tax Act for ELHTs, will apply to all trusts established for the provision of group benefits. Transitional rules will be added to the Income Tax Act to facilitate the conversion. Starting in 2021, trusts that have not converted will be subject to the normal tax rules for trusts.
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