Tax wiki
s. 32.1
PART I — Income Tax · DIVISION B — Computation of Income · SUBDIVISION B — Income or Loss from a Business or Property · Special Cases
Employee benefit plan deductions
Not yet annotated · Text current to 2026-06-21 · section last amended 2004-08-31
Current text
Where a taxpayer has made contributions to an employee benefit plan in respect of the taxpayer’s employees or former employees, the taxpayer may deduct in computing the taxpayer’s income for a taxation year
such portion of an amount allocated to the taxpayer for the year under subsection 32.1(2) by the custodian of the plan as does not exceed the amount, if any, by which
the total of all amounts each of which is a contribution by the taxpayer to the plan for the year or a preceding year
exceeds the total of all amounts each of which is
an amount in respect of the plan deducted by the taxpayer in computing the taxpayer’s income for a preceding year, or
an amount received by the taxpayer in the year or a preceding year that was a return of amounts contributed by the taxpayer to the plan; and
where at the end of the year all of the obligations of the plan to the taxpayer’s employees and former employees have been satisfied and no property of the plan will thereafter be paid to or otherwise be available for the benefit of the taxpayer, the amount, if any, by which
the total of all amounts each of which is a contribution by the taxpayer to the plan for the year or a preceding year
exceeds the total of all amounts each of which is
an amount in respect of the plan deducted by the taxpayer in computing the taxpayer’s income for a preceding year, or, by virtue of paragraph 32.1(1)(a), for the year, or
an amount received by the taxpayer in the year or a preceding year that was a return of amounts contributed by the taxpayer to the plan.
Allocation
(2)Every custodian of an employee benefit plan shall each year allocate to persons who have made contributions to the plan in respect of their employees or former employees the amount, if any, by which the total of
all payments made in the year out of or under the plan to or for the benefit of their employees or former employees (other than the portion thereof that, by virtue of subparagraph 6(1)(g)(ii), is not required to be included in computing the income of a taxpayer), and
all payments made in the year out of or under the plan to the heirs or the legal representatives of their employees or former employees
exceeds the income of the plan for the year.
Income of employee benefit plan
(3)For the purposes of subsection 32.1(2), the income of an employee benefit plan for a year
in the case of a plan that is a trust, is the amount that would be its income for the year if section 104 were read without reference to subsections 104(4) to 104(24); and
in any other case, is the total of all amounts each of which is the amount, if any, by which a payment under the plan by the custodian thereof in the year exceeds
in the case of an annuity, that part of the payment determined in prescribed manner to have been a return of capital, and
in any other case, that part of the payment that could, but for paragraph 6(1)(g), reasonably be regarded as being a payment of a capital nature.
Source: Justice Laws Website. Not an official version.
Historic text
This section has not been amended since the start of the point-in-time record on 31 August 2004.
Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 32.1 links to the one before it.
Enacting and amending legislation
- 1980-81-82-83, c. 48, s. 14, c. 140, s. 15
Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.
Cross-references
Citation
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 32.1.