TORONTO, Sept. 11, 2014 /CNW/ – Canadian Federation of Independent Business (CFIB) president Dan Kelly joined Finance Minister Joe Oliver today as he announced a major reduction in Employment Insurance (EI) premiums for small business owners. The announcement was made at Value Wood Floors – a Toronto-area small business and member of CFIB.
“This is a big one,” said Kelly. “The Small Business Job Credit will result in a 15 per cent net reduction in EI premiums paid by small businesses over the next two years. I couldn’t be more pleased to stand beside Finance Minister Oliver as he announces half a billion for small firms in payroll tax cuts – the most harmful form of taxation affecting job creation and employee wages. 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.”
As employers pay 1.4 times the rate of EI of their employees, CFIB has been a leading voice on EI reform for decades and has pushed for rate reductions at the earliest opportunity. Small firms will be pleased to know that on top of a 15 per cent reduction in premiums for 2015 and 2016, there is a further rate cut planned for all employers and employees in 2017, bringing rates down by a total of 22 per cent compared to 2014 levels.
“Ensuring the hard-earned money employers and employees pay into the EI system is strictly used for EI and workplace training purposes is critical,” added Kelly. “CFIB is monitoring closely and is confident the new seven year break-even rate-setting mechanism will ensure that EI funds are used exclusively for the EI program over that time frame.”
Small business owners in Quebec will benefit from the same 39 cent reduction, but total rates will differ due to Quebec’s parental insurance plan. More details about the Small Business Job Credit can be found on the Canada Revenue Agency website.
CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region.
Background on the Small Business Job Credit:
The credit is effective for two years, beginning in 2015, and will be available to employers paying under $15,000 per year in EI premiums (or approximately $570,000 in EI assessable payroll). As examples, the credit would be available to firms with no more than 14 employees earning $40,000 or up to 22 employees earning $25,000 per year.
|
Planned EI rates (per $100 in insurable earnings) |
2014 |
2015/16 |
2017 |
|
Employee rate |
$1.88 |
$1.88 |
$1.47 |
|
Effective rate for small business |
$2.63 |
$2.24 |
$2.06 |
|
General employer rate |
$2.63 |
$2.63 |
$2.06 |
(SOURCE Canadian Federation of Independent Business)