The federal government has announced that Employment Insurance rates will increase in 2018 for both employees and employers. As a business owner, you pay 1.4 times the rate that an employee does, meaning that this hike hits you even harder!
Why are rates increasing?
The government has committed to making new investments in training programs that are funded by EI, as well as increasing parental leave and expanding compassionate care leave, so that employees can care for loved ones who are gravely ill. These will mean higher costs to the EI system.
What does this mean for you?
In past, the Small Business Job Credit (SBJC) was available for the 2015 and 2016 tax years, which closed the gap so you paid 1.2 times the employee rate. This ended after 2016, so despite the rate being lowered for employees and employers in 2017, small businesses actually saw an increase of $0.04 without the SBJC.
EI RATES (per $100 insurable earnings)
|Employee rate||$1.88||$1.63||$1.66 ↑|
|Employer rate||$2.63||$2.28||$2.32 ↑|
|Rate for small business||$2.24*||$2.28||$2.32 ↑|
*As a result of the Small Business Job Credit (SBJC) that was in place in 2015 and 2016.
What is CFIB doing about this?
We’ve long advocated for more fairness in the EI system for employers. Over the years, we’ve been able to score some big wins for small business:
- We fought to ensure that the hard-earned money that you and your employees pay into EI is only used for EI-related expenses. In 2008, the government created a separate account for EI revenues with a starting balance of $2 billion, along with a Crown corporation called the Canada Employment Insurance Financing Board to set premiums.
- We advocated for stability in EI rates for years, and finally, in 2014, the federal government announced the seven-year break-even rate for that ensures EI funds are used exclusively for the EI program during that time frame.
- In 2014, the government implemented a CFIB idea by creating the Small Business Job Credit (SBJC), which provided a tax credit to small business owners to offset EI premiums; we were there when the government announced this!
We’re keeping up the fight by recommending some of the following things to government:
- Bring back the Small Business Job Credit (or a variation of the credit) beyond 2016.
- Create an EI credit to encourage businesses to hire more youth between the ages of 18 and 24 that would offer employers a 12-month break on EI premiums – a Liberal Party pledge during the last federal election.
- Implement a 50/50 split in EI premiums so that employers don’t contribute more than their fair share.
- Consider putting in place a permanently lower EI rate for small businesses.
- Implement a system to allow business owners to claim over-contributions. While employees get a refund on their tax return if they go over their maximum annual contribution, employers can’t.
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