What is a Health and Welfare Trust (HWT)?
A HWT is an arrangement between an employer and selected employees under which the employer can make tax-deductible contributions for certain “health and welfare benefits” including: • A private health services plan; • Group term life insurance; • Provincial health services premiums; and • Income continuation plan regarding disability. The taxation of HWTs is addressed by the Canada Revenue Agency (CRA) in Interpretation Bulletin IT- 85R2. A copy may be obtained from your local CRA office or through CRA’s Internet website: Interpretation Bulletin IT-85R2 – “Health and Welfare Trusts for Employees” (www.cra-arc.gc.ca/E/pub/tp/it85r2/it85r2-e.html) How do a Wage Loss Replacement Plan (WLRP) and a HWT compare? A WLRP and a HWT both provide a means of grouping individual disability policies together so in each case the arrangement is considered a “grouped” plan for income tax purposes. In order to qualify as a grouped plan, a minimum of two employees must be covered by the plan. A WLRP doe
