Tax-Free Maternity Leave

June 09, 2019


The Hon. Andrew Scheer has announced the Supporting New Parents Act. The purpose of the legislation is to remove federal income tax from benefits received under the EI maternity and EI parental programs.

The Critical Early Years

The arrival of a new child is one of the most important moments in a parent’s life. Yet, because of the financial pressures that come with additional costs of caring for a newborn and the decision to take leave from one’s employment, it can also be a stressful time for a parent. For this reason, the proposed legislation would take steps to provide parents with additional tax relief.

Canada’s Conservatives understand that the government should not be taxing the time parents take to bond with their new child.

Policy Details

  • The Supporting New Parents Act would remove federal income tax from EI maternity and EI parental benefits by providing a non-refundable tax credit for any income earned under these two programs. A non-refundable tax credit amounts to a 15% tax rebate on these benefits.
    • It also provides a tax credit of an equivalent amount for residents of Quebec who receive benefits under the Quebec Parental Insurance Plan (QPIP).
  • The benefit to an average Canadian whose regular salary is $50,000 would be about $4,000.
  • The tax credit is for EI maternity benefits and EI parental benefits.
    • Under EI maternity, the birth mother can receive benefits for up to 15 weeks.
    • Under EI parental, new parents – either parent or a combination of both – can receive additional benefits for up to 35 weeks.
    • Under the recent expansion to EI, parental benefits, parents can take benefits up to 61 weeks at a reduced wage replacement of 33%.