At a glance
- Proposed CT-IP change allows funded plans to elect deferral treatment
- Tax liability may shift from contributions to benefit payments
- Potential cash flow advantages for employers and planholders
- Review current CT-IP calculation and remittance processes
- Monitor details on election mechanics and compliance requirements
Ontario’s 2026 Budget proposes an amendment to the Corporations Tax Act that would allow funded benefit plans to elect to be treated as unfunded benefit plans for Insurance Premium Tax (CT-IP) purposes, effective April 1, 2026.
Under the current rules, funded benefit plans are generally subject to CT-IP when taxable contributions are paid into the plan, resulting in an upfront tax cost. By contrast, unfunded benefit plans are generally subject to CT-IP only as benefits are paid. Administration fees related to the plan are also subject to CT-IP.
If enacted, the proposed amendment would allow planholders of funded benefit plans to defer CT-IP until benefits are paid rather than when contributions are made.
Why this matters
This proposal is intended to provide a cash flow benefit for employers and other planholders by delaying the timing of CT-IP liability. Plan sponsors and administrators should review their current processes for calculating and remitting CT-IP to assess whether this election may be beneficial.
What planholders should consider
Organizations with funded benefit may want to evaluate whether this proposed election could reduce upfront CT-IP costs and better align tax liability with benefit payments. Additional details will be important, including how the election will be made and whether any transitional or compliance rules will apply.
How BDO can help
As further details become available, it will be important to assess how this proposed change may affect your organization.
BDO’s tax professionals can help you evaluate the potential impact of this election, review your current processes, and prepare for implementation if the proposal is enacted.
The information in this publication is current as of March 26, 2026.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.