Income Tax Regulations

• 8516 (1) For the purposes of subsection 147.2(2) of the Act, a contribution described in any of subsections (2) to (4) is a prescribed contribution.

Funding on Termination Basis

• (2) A contribution that is made by an employer to a registered pension plan is described in this subsection if

  • (a) the contribution is made pursuant to a recommendation by an actuary in whose opinion the contribution is required to be made so that, if the plan is terminated immediately after the contribution is made, it will have sufficient assets to pay benefits accrued under the defined benefit provisions of the plan, as registered, to the time the contribution is made;

  • (b) the recommendation is based on an actuarial valuation that complies with the following conditions:

    • (i) the effective date of the valuation is not more than four years before the day on which the contribution is made,

    • (ii) all assumptions made for the purposes of the valuation are reasonable at the time the valuation is prepared and at the time the contribution is made,

    • (iii) the valuation is prepared in accordance with generally accepted actuarial principles applicable with respect to a valuation prepared on the basis that a plan will be terminated, and

    • (iv) where more than one employer participates in the plan, assets and actuarial liabilities are apportioned in a reasonable manner among participating employers;

  • (c) the recommendation is approved by the Minister; and

  • (d) at the time the contribution is made, the plan is not a designated plan.

Contributions Required by Pension Benefits Legislation

• (3) A contribution that is made by an employer to a registered pension plan is described in this subsection if

  • (a) the contribution

    • (i) is required to be made to comply with the Pension Benefits Standards Act, 1985 or a similar law of a province,

    • (ii) is made in respect of benefits under the defined benefit provisions of the plan as registered, and

    • (iii) is made pursuant to a recommendation by an actuary;

  • (b) the recommendation is based on an actuarial valuation that complies with the following conditions:

    • (i) the effective date of the valuation is not more than four years before the day on which the contribution is made,

    • (ii) all assumptions made for the purposes of the valuation are reasonable at the time the valuation is prepared and at the time the contribution is made, and

    • (iii) where more than one employer participates in the plan, assets and actuarial liabilities are apportioned in a reasonable manner among participating employers;

  • (c) the recommendation is approved by the Minister; and

  • (d) at the time the contribution is made, the plan is not a designated plan.

Shared Funding Arrangement

• (4) A contribution that is made by an employer to a registered pension plan is described in this subsection if

  • (a) responsibility for the governance of the plan is shared between the participating employers and the members of the plan;

  • (b) the contribution is made pursuant to an arrangement approved by the Minister under which it is reasonable to expect that, on a long-term basis, the members’ entitlement to benefit from actuarial surplus, the members’ obligation to fund actuarial deficiencies and the members’ obligation to make regular current service contributions, under the defined benefit provisions of the plan, will not be less than 66 2/3% or more than 100% of each such entitlement or obligation of the participating employers;

  • (c) the contribution is a current service contribution that would be an eligible contribution under subsection 147.2(2) of the Act if no contributions were prescribed for the purposes of that subsection and if that subsection were read without reference to subparagraphs (d)(ii) and (iii);

  • (d) the recommendation pursuant to which the contribution is made is such that the current service contributions to be made by the employer and the employer’s employees in respect of the provisions do not exceed,

    • (i) where the amount of actuarial surplus in respect of the employer is not more than 10% of the amount of actuarial liabilities apportioned to the employer in respect of the employer’s employees and former employees, the current service contributions that would be required if there were no actuarial surplus under the provisions,

    • (ii) where the amount of actuarial surplus in respect of the employer is greater than 10%, but not more than 15%, of the amount of actuarial liabilities apportioned to the employer in respect of the employer’s employees and former employees, 75% of the current service contributions that would be required if there were no actuarial surplus under the provisions,

    • (iii) where the amount of actuarial surplus in respect of the employer is greater than 15%, but not more than 20%, of the amount of actuarial liabilities apportioned to the employer in respect of the employer’s employees and former employees, 50% of the current service contributions that would be required if there were no actuarial surplus under the provisions,

    • (iv) where the amount of actuarial surplus in respect of the employer is greater than 20%, but not more than 25%, of the amount of actuarial liabilities apportioned to the employer in respect of the employer’s employees and former employees, 25% of the current service contributions that would be required if there were no actuarial surplus under the provisions, and

    • (v) where the amount of actuarial surplus in respect of the employer is greater than 25% of the amount of actuarial liabilities apportioned to the employer in respect of the employer’s employees and former employees, nil; and

  • (e) at the time the contribution is made, the plan is not a designated plan.