Income Tax Act — I-3.3 144.1
one of the following conditions: (i) it contains at least one class of beneficiaries where (A) the members of the class represent at least 25% of all of the beneficiaries of the trust who are employees of the participating employers under the trust, and (B) either of the following conditions is met: (I) at least 75% of the members of the class are not key employees of any of the participating employers under the trust, or (II) the contributions to the trust in respect of key employees who deal at arm’s length with their employer are determined in connection with a collective bargaining agreement, or (ii) in respect of the private health services plan under the trust, the total cost of benefits provided to each key employee (and to persons described in subparagraph (2)(d)(ii) in respect of the key employee) in relation to the year does not exceed the amount determined by the formula $2,500 × A(B/C) where A is the total number of persons each of whom (A) is a person to whom designated employee benefits are provided under the plan, and (B) is the key employee or a person described in subparagraph (2)(d)(ii) in respect of the key employee, B is the number of days in the year that the key employee was employed on a full-time basis by an employer that participates in the plan, and C is the number of days in the year; (f) unless the condition in subparagraph (e)(ii) is satisfied, the rights under the trust of each key employee of a participating employer are not more advantageous than the rights of a class of beneficiaries described in subparagraph (e)(i); (g) no participating employer, nor any person who does not deal at arm’s length with a participating employer, has any rights under the trust as a beneficiary or otherwise, except rights to (i) designated employee benefits, (ii) to enforce covenants, warranties or similar provisions regarding (A) the maintenance of the trust as an employee life and health trust, or (B) the operation of the trust in a manner that prevents subsection (3) from applying to prohibit the deduction of an amount by the trust under subsection 104(6), or (iii) prescribed payments; and (h) [Repealed, 2021, c. 23, s. 30] (i) trustees who do not deal at arm’s length with one or more participating employers must not constitute the majority of the trustees of the trust. Breach of terms, etc. (3) No amount may be deducted in a taxation year by an employee life and health trust pursuant to subsection 104(6) if in the taxation year the trust (a) is not operated in accordance with the terms required by subsection (2) to govern the trust, unless it is reasonable to conclude that its trustees neither knew nor ought to have known that designated employee benefits have been provided to, or contributions have been made in respect of, beneficiaries other than those described in subparagraph (2)(d)(i) or (ii); or (b) provides any benefit for which, if the benefit had been paid directly to the employee and not out of the trust, the contributions or premiums would not be deductible in computing the income of an employer in respect of any taxation year. Deductibility of employer contributions (4) In computing the income of an employer, (a) the employer may deduct for a taxation year the portion of its contributions to an employee life and health trust made in the year that may reasonably be regarded as having been contributed to enable the trust to (i) pay premiums to an insurance corporation that is licensed to provide insurance under the laws of Canada or a province for insurance coverage for the year or a prior year in respect of designated employee benefits for beneficiaries described in subparagraph (2)(d)(i) or (ii), or (ii) otherwise provide (A) group term life insurance as described in clause 18(9)(a)(iii)(B), or (B) any designated employee benefits payable in the year or a prior year to, or for the benefit of, beneficiaries described in subparagraph (2)(d)(i) or (ii); and (b) the portion of any contribution made to an