A corporation (“Corporation”) operating a Canadian retail chain, and the over-1,000 stores that owned it settled a health and welfare trust (the “Trust”) providing health benefits to employees ol the Corporation (representing 22% of all employees under the Trust) and employees of Member stores and affiliates as to the balance. Collectively, the employees of all participating employers are the beneficiaries of the Trust. There is no collective bargaining agreement. The benefits offered to employees may vary by participating employer, so that there may be different classes of benefits and coverage levels offered to the employees of some participating employers. Does this mean that s. 144.1(2)(e)(i) is not satisfied? CRA responded:
The term “class of beneficiaries” is defined in subsection 144.1(1) of the Act (for purposes of section 144.1 of the Act) as a group of beneficiaries with identical rights or interests under the trust. … [A] “right”, as it pertains to an ELHT, includes an entitlement to designated employee benefits (“DEBs”). Thus, where the employees of several participating employers have the same rights under the trust (but not necessarily the same benefit entitlements or coverage), it is our view that such employees may collectively form a class of beneficiaries for purposes of clause 144.1(2)(e)(i)(A) of the Act as long as the benefit entitlements for each employee in the class are reasonably similar. This could be the case, for example, if a particular designated benefit plan offers various levels of benefit coverage that are different but similar to those offered by another participating employer whose employees are included in the class.
Where such a class of beneficiaries constitutes 25% or more of all beneficiaries of the trust, the condition in clause 144.1(2)(e)(i)(A) of the Act would be satisfied.