Payroll News: 2019 Employment Insurance Rate ChangesPosted: January 29, 2019
Posted in: Strategic Thinking
One important change has been introduced that affects payroll processing in 2019: the rate applied to calculate the maximum Employment Insurance (EI) contribution amounts have been reduced, though benefit amounts remain the same.
The EI program premium rate fell four cents to $1.62 per $100 of insurance, effective January 1, 2019. According to Finance Minister Morneau, it’s the lowest EI premium rate since 1980 and Canada’s low unemployment rate was the determining factor. However, employees may not see much change in their net pay, as CPP (Canada Pension Plan) premiums have recently risen.
The EI changes could also lead to an employer rate reduction for eligible businesses that provide employees with a qualifying short-term disability plan under the EI Premium Reduction Program for Employers. Employers that meet the following criteria may be entitled to pay EI premiums at a rate lower than the standard employer rate of 1.4 times the employee’s EI premiums:
- Provide at least 15 weeks of benefits for short-term disability
- Match or exceed the level of benefits provided under EI
- Pay benefits to employees within eight days of illness or injury (the elimination period cannot exceed seven consecutive days)
- Be accessible to employees within three months of hiring
- Cover employees on a 24-hour-a-day basis
Evidence of the employer’s commitment to provide a short-term disability plan is also required. In addition, the employer must provide an undertaking that they will return five-twelfths of the savings on their EI premiums to the employees covered by their plan. More details about this program are available here.
In light of these recent changes to payroll rules, competent, knowledgeable bookkeepers who can accurately administer payroll are in demand. The technical side of payroll, if done incorrectly, can cost the employer or the employee money, not to mention incur penalties with the Canada Revenue Agency. Knowledge Bureau’s Advanced Payroll for Small Business course has recently been updated to reflect these recent rule changes.
This course will help you become a more astute compliance manager, to ensure payroll is more than simply accurate. It will also allow you to assist your client to be shrewd in negotiating employment contracts to the after-tax benefits of the employees of the firm, which could include family members.
Each student who takes this course will learn to:
- Understand the compliance requirements, federally and under provincial Employment Standards Codes in their area of operation.
- Complete TD1 – Personal Tax Credit Return form, T1213 – Request to Reduce Taxes at Source form, with a view to reducing withholding taxes, thus freeing up money for the employee that can be then be used to increase private pension contributions (to an RRSP, PRPP, for example).
- Account for a variety of compensation plans, including hourly wages, salary, commissions, piecework, bonuses, retroactive payments, and vacation pay.
- Account for an extensive list of taxable and non-taxable benefits.
- Account for differences in pay structure for workplaces governed by a union.
- Provide tax-specific information required by certain profiles, including commission salespeople, northern residents, truckers, tradespeople, and executives.
- Account for termination pay, Records of Employment, T4, T4 Summary, workers compensation, employer health taxes, other public health care plans.
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