Insurance association puts forward federal budget recommendations

The Canadian Life and Health Insurance Association (CLHIA) recently released pre-budget recommendations the association has made to the federal government. 

The CLHIA is asking the government to ensure the Canada Pharmacare Act targets those without benefits coverage and that employers be incentivized to continue providing healthcare solutions through workplace plans.

The CLHIA is also recommending the government introduce a tax credit for employers so they don’t drop or reduce dental coverage once the public care plan rolls out under the Dental Benefit Act. 

Further, the association is recommending that Tax-Free Savings Account (TFSA) liquidity requirements be waived, allowing Canadians to use this account to supplement retirement savings. 

“Many Canadians are using TFSAs to supplement retirement savings,” says the report. “These individuals should have the flexibility to secure their retirement by purchasing an annuity that provides guaranteed lifetime income within their TFSA. Currently, the liquidity requirement of the TFSA rules prevents holding life annuities within said account.”

The association is suggesting that consumers should be permitted to waive this liquidity requirement, at least at older ages.

The report also says revenue measures previously announced by the government “unfairly target life insurers,” and is asking for sector-specific taxation on life insurers. 

The report was referring to the 2022 budget measure to charge an additional 1.5 per cent tax on taxable income greater than $100 million earned by Canadian banks and insurers.

“(This) has created an inequitable sector-specific two-tier corporate tax system in Canada,” says the report. “This two-tiered tax is not a good policy. Profits made by Canadian corporations (other than small business corporations) should be taxed at the same rate irrespective of the sector of the corporation.” 

“We urge the government to make changes so that taxes are only payable when a life insurer earns income and not on income it is expected to earn in future,” the report says. 

Finally, the CLHIA is urging the government to move ahead with implementing the 2018 budget measures that will enable greater private sector investment in infrastructure.

“We recognize the role sustainable infrastructure plays in mitigating climate change and adapting to it,” they say. “This is an area of significant and growing concern to the public and our industry.”