A trust is considered to be an employee life and health trust if it was established after 2009 and, for a given taxation year, it meets all the following requirements throughout that taxation year:

• The trust's only objectives are to: 
  • provide designated employee benefits to current or former employees of one or more participating employers, or on their behalf, and
  • distribute, after the trust has been wound up, the remaining funds to the beneficiaries, other than key employees, according to their interest in the trust.
• The trust is resident in Canada.
• Each beneficiary of the trust is either an employee of a participating employer, an individual related to the employee, or another employee life and health trust.
• The trust is not maintained primarily for the benefit of employees of a participating employer.
• The rights of the key employees of a participating employer are not more advantageous than the rights of most of the other beneficiaries.
• The only right granted to a participating employer (or to a person not dealing at arm's length with the employer) is the right to designated employee benefits.
• The trust is administered in accordance with its terms and objectives.

The following rules apply to all employee life and health trusts:

• The trust can deduct designated employee benefits that became payable by the trust in the taxation year. The deduction is included in the calculation of the non-capital losses for that year.
• Non-capital losses from one year can be carried back or forward three years. However, the trust cannot carry non-capital losses to a year in which the trust does not meet all of the conditions to be considered an employee life and health trust.