The Conference for Advanced Life Underwriting (CALU) has published its submission to Finance Canada, making recommendations in advance of Canada’s 2026 budget. In it, the association is calling for several changes to registered account rules, to the tax on split income (TOSI) rules and calls for the promised review of Canada’s corporate tax system.

In an exchange with the Insurance Portal, CALU notes that the Liberal party’s election platform in 2025 indicated that it would conduct an expert review of the corporate tax system if the party came to power. “The promised review does not appear to have started, according to recent media reports,” they add.

Adverse effects

“Considered individually, some of these tax measures may have benefitted certain types of businesses. Collectively, however, they have had – and are expected to continue having – adverse effects on many businesses and the broader Canadian economy,” the submission states. “Impacts include the inequitable treatment of different types of businesses; a significant increase in business planning complexities and compliance costs; and disincentives to establishing and growing small businesses in Canada.”

They add that Canada’s corporate tax system has not been fully reviewed in nearly 60 years. “It is therefore timely for the federal government to undertake a comprehensive review.”

TOSI rules, meanwhile, first introduced in 2018, “are widely regarded as one of the most complex areas of Canadian personal tax law, and impose significant compliance and administrative costs on small business owners and their advisors.”

Increasingly complex

The association, in its correspondence, says federal rules governing the taxation of small business owners and private corporations are becoming increasingly complex and difficult for many to understand. “In addition, we are concerned that many recent tax changes have been implemented piecemeal, resulting in an onerous ‘pancaking’ effect of rules and costs,” they write.

“We recognize that the federal government’s commitment to comprehensive corporate tax reform is a significant undertaking that will require considerable time and resources. In the near term, we support the government’s “one bite at a time” approach to tax reform suggested by the Honourable Wayne Long.”

Finally, the submission focuses on registered retirement savings plan (RRSP), registered retirement income fund (RRIF) and tax-free savings account (TFSA) rules to help Canadians meet the need for sustainable retirement incomes. Regarding RRSPs and RRIFs, they note that the vehicles have remained largely unchanged since they were introduced and increasingly fall short of meeting the retirement needs of all individuals, regardless of age.

“The federal government should help Canadians save for their retirement by allowing RRSP contributions to continue to age 75, and by indexing unused RRSP contribution room annually,” they write.

Minimum payout rule

They also call into question the minimum payout rule which forces seniors to take money out of their RRIFs, regardless of their retirement plans or financial circumstances. “Those rules can discourage individuals from continuing to work past age 71, even if they can still make valuable contributions,” the paper notes. “As minimum RRIF withdrawals rise over time, working seniors may face higher tax rates on their employment income. In such circumstances, a senior worker finds themselves working less for themselves and more to pay taxes at increasingly higher rates.” They recommend deferring the requirement to convert an RRSP to an RRIF until age 75.

More, they note that in effect, mandatory minimum withdrawal requirements during a market downturn creates a reverse dollar-cost-averaging effect. CALU, they add, also recommends allowing RRIF holders to exempt a fixed amount (up to$180,000, indexed) from the minimum payout formula until age 85.

A simple solution

The association is also calling for the government to create a simple solution: that is to let RRSP and RRIF owners name a trust to receive their registered plan assets tax-free when they die. For TFSA holders, they also recommend the government allow the purchase of a non-commutable payout annuity within a TFSA upon reaching a specified age.

“CALU has a 30+ year proven track record of engaging with federal policymakers on tax and other issues and remains a proud and trusted advisor to them,” the association’s representatives write to the Insurance Portal. “Our approach is non-partisan, collaborative and informed by sound analysis and expertise.