2013 Employment Insurance Premiums – Canada

posted in: Payroll Basics | 0

Every year the CRA (Canada Revenue Agency) announces new rates for CPP & EI.  As you recall from previous posts, CPP or Canada Pension Plan is a mandatory statutory requirement for all employees 18 years and older.  For every $$ you contribute into the plan, your boss is obligated to contribute the same $$.  It is a 100% match into your Canadian government CPP.

Another mandatory statutory deduction is EI or employment insurance.  Employment insurance is a temporary income paid to you during a period of unemployment.  If you lost your job, then you could potentially collect EI employment insurance.  As an employee you would be required to pay into the plan as long as you are earning $$ from a job.  For every $$ you put in, your boss puts in $1.40 (maximum).

As the employer, you are interested in the 2013 EI rates.  If you offer a short term disability (STD) or sick pay plan where your staff does not have to claim EI employment insurance should they be off sick for up to 17 weeks you are granted a reduced rate.  The better your plan is, the better your employer rate.  Employment insurance premiums in Canada for 2013 are 1.88% (1.52% in Quebec) of insurance dollars; cash related remuneration, not including any benefits except for employer paid RRSP and board and lodging paid to the employees on their pay cheques.  The maximum insurable earnings for 2013 are $47,400.  This means the most your employees will be deducted is $891.12 ($720.48 in Quebec) and the maximum employer contribution is $1,247.57 ($1,008.67 in Quebec).  How did I calculate that?

Federal                   Quebec

Maximum Insurable Earnings                     $47,400                 $47,400

2013 Employment Insurance Rate              x 1.88%                  x 1.52%

Maximum Employee Contribution                $891.12                  $720.48

Employer EI Premium Rate                        x 1.40%                  x 1.40%

Maximum Employer Premium                   $1,247.57                $1,008.67

 

If your STD plan is accepted by Service Canada as a viable plan, you will be awarded a reduced EI employer rate.  For you employees reading this don’t get all hot and bothered.  The company will continue to contribute more than you do into the plan.  Plus, the employer must return 5/12 of the savings received from a reduced rate back to the employees in the form of cash, enhanced benefits, etc.  Once your plan is accepted you don’t need to resubmit annually.  The only time you send for a review is when your STD plan changes.  Check out the below table:

http://www.servicecanada.gc.ca/eng/cs/prp/0300/0300_130.shtml

Here’s to helping you better understand what’s in your pocket.

Until next time.

 

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