Big breakthrough on payroll taxes: Small Business Job Credit announced

CFIB joined federal Finance Minister Joe Oliver to announce the creation of the Small Business Job Credit (SBJC), a credit that will result in a 15% net reduction in Employment Insurance (EI) premiums paid by small businesses over the next two years (18% in Quebec).

We are pleased to see that, in its most recent budget, the federal government renewed the credit for the 2016 tax year.

How the credit works:

  • Effective for two years, beginning in 2015
  • Available to employers paying $15,000 or less per year in EI premiums (approximately $570,000 in EI assessable payroll in Canada and approximately $696,000 in Quebec).

Who qualifies? Examples:

  • Firm with 14 employees or less, each earning $40,000/year
  • Firm with 22 employees or less, each earning $25,000/year


Some differences in Quebec

In Quebec, small business owners will also benefit from the same reduction of $ 0.39 per $ 100 of EI assessable payroll in 2015-2016. It will be added to the reduction in the contribution rate linked to the Quebec Parental Insurance Plan. As a result, the percentage of the rate reduction and the contribution rates differ from those prevailing in the rest of Canada.

Small Business Job Credit

Small Business Job Credit

Dan Kelly, CFIB's President, CEO and Chair and Finance Minister Joe Oliver

This will make it easier to hire new workers or invest in additional training to help entrepreneurs grow their businesses. In fact, CFIB estimates that this credit will create 25,000 person years of employment over the next few years. And there is a further rate cut planned for all employers and employees in 2017, bringing rates down by a total of 22% compared to 2014 levels!

CFIB knows from its members that payroll taxes like EI are particularly challenging for small business. This announcement is fantastic news for Canada’s entrepreneurs and their employees, and as such, can only be a positive for the Canadian economy.

With the application of this credit, small employers will effectively pay 1.2 times (1.15 in Quebec) the employee rate for the next two years – instead of 1.4 times as defined by law. While this is only a temporary measure, we will use this to lobby towards our long-standing goal of sharing the cost of EI premiums equally between employers and employees.

CFIB will continue to push for payroll tax relief for its members, including a major campaign to oppose provincial pension plans like the ORPP.

Visit the Finance Canada website for more details.