The Canadian Department of Finance has announced the release of a package of draft legislative proposals for changes to the Income Tax Act and the Income Tax Regulations to accommodate Pooled Registered Pension Plans (PRPPs).
In December 2010, there was unanimous agreement among provinces, territories and the federal government to move forward with the framework for PRPPs. These rules will set the stage for all provinces to introduce legislation to implement PRPPs.
PRPPs will be a broad-based, low-cost, defined contribution pension vehicle that will be available to employers, employees and self-employed individuals.
The PRPP tax rules have been designed to be simple and straightforward and to promote low-cost plans. They will encourage take-up by employers and ultimately, greater pension coverage among Canadians.
The proposed tax rules for PRPPs will apply to both federally and provincially regulated PRPPs and will operate alongside the Pooled Registered Pension Plans Act.
A backgrounder outlines the key measures proposed in the package, while explanatory notes provide further details. Interested parties may submit comments on the package until February 14, 2012.