Credit score

New payroll program will lower EI premiums for some

Payroll taxes have always been a concern for small business owners, but a newgovernmentprogramcouldmeanthey’ll be getting a break in

The federal government in September introduced the Small Business Job Credit, which is a two-year measure that will help small businesses by lowering their employment insurance ( premiums from the legislated rates previously announced for and The credit does not affect the premiums paid by employees. To be eligible for this credit, the total employer premiums paid for all your payroll accounts in and/or will have to be or less.

The best part is that you don’t actually have to apply for the credit. Canada Revenue Agency ( will automatically establish your eligibility for and separately, based on the payroll tax slips that you file for each of those years.

Employers currently pay premiums equal to $2.63 per $100 of insurable earnings, which is equal to 1.4 times the rate that employees pay of $1.88 per $100 of insurable earnings. For and the small business job credit would reduce an eligible employer’s premiums by 15% to $2.24 per $100 of insurable earnings.

For example, let’s say you run a business that employs 14 employees, each earning for a total payroll of Your premiums would be approximately using the normal 2.63% rate. But since your total premiums are under you would be eligible for the Small Business Job Credit and receive a refund of about

calculated as the difference between your normal employer premiums paid at the legislated rate ($ versus the premiums recalculated under the 2.24% reduced small business rate ($

The bad news, however, is that if you receive the credit, the has indicated you have to either report that amount as income or reduce your expenses when you file your business return for the year in which you receive the credit.

On a related matter, the new seven-year break-even rate-setting mechanism for premiums is set to take effect in As projected in the federal budget, the premium rate will fall from $1.88 in to an estimated $1.47 in (Employers will continue to pay 1.4 times the premium rate, as stated above). After the move to the seven-year break-even rate in however, annual adjustments to the rate will be limited to 5¢, which is comforting news for small business employers and their employees alike.