Finance Minister Joe Oliver announced last week a cut in Employment Insurance (EI) premiums for small businesses.
This will benefit businesses that pay up to $15,000 in EI premiums, which reduces the EI premium from $1.88 per $100 of payroll to $1.60. Any firm that pays employer EI premiums equal to or less than $15,000 in those years (tax years 2015 and 2016) will be eligible for the credit. It is expected that almost 90% of all EI premium-paying businesses in Canada will receive the credit, reducing their EI payroll taxes by nearly 15%.
In addition, the Canada Employment Insurance Commission (CEIC) has also followed with related parameters: Maximum Insurable Earnings (MIE) for 2015; reductions related to the Quebec Parental Insurance Plan (QPIP); reductions for employers registered under the Premium Reduction Program (PRP); and required earnings for self-employed Canadians to participate in EI special benefits.
The difference will be calculated automatically by the Canada Revenue Agency (CRA) for each eligible small firm at year end, and any credit due will be refunded to the small business after first covering any outstanding debt. In addition, all employers and employees are also expected to benefit from a substantial reduction in the EI premium rate in 2017 when the new seven-year break-even rate-setting mechanism takes effect. This new approach is said to ensure that EI premiums are no higher than needed to pay for the EI program over time.