Employment Insurance Tax Credit For Employers

In September 2014 Ottawa announced an Employment Insurance (EI) tax credit for employers.

Currently employees pay EI rates of $1.88 per $100 of earnings (up to a maximum of $913.68 for 2014). Employers pay the employee rate multiplied by 1.4.

For the 2015 and 2016 calendar years employers, who pay $15,000 or less in employer EI contributions in the year, will receive a tax credit of $0.39 per $100 of employee earnings.

Here is how the math works:

Currently on $100 of employee income an employer pays $2.63 in employer EI contributions ($100 times $1.88 times 1.4).

For the 2015 and 2016 calendar years on $100 of employee income an employer will pay (after the tax credit is received) $2.24 in employer EI contributions ($100 times 1.60% times 1.4).

The difference between the $2.63 and the $2.24 is $0.39.

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Posted on October 31, 2014, in Payroll and tagged . Bookmark the permalink. Leave a comment.

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