Federal and provincial updates for new year
Payroll It is a new year and for payroll that means implementing new rates and rules while preparing for year-end reporting. To help payroll departments stay up to date, here is a quick look at what is new or upcoming for 2016:
Federal updates
CPP:
Maximum pensionable earnings: $54,900
Employer and employee contribution rate: 4.95 per cent
Basic exemption: $3,500
Maximum annual employer and employee contribution: $2,544.30
Employment insurance (EI):
Maximum insurable earnings: $50,800
Employee premium rate: 1.88 per cent (outside Quebec); 1.52 per cent (in Quebec)
Maximum annual employee premium: $955.04 (outside Quebec); $772.16 (in Quebec)Employer premium rate: 1.4 times the employee rate unless the employer has a government-approved reduced premium rate
An EI Small Business Job Credit continues to apply in 2016 for businesses whose employer EI premiums are no more than $15,000.
Income tax: The federal government has tabled legislation to change some personal income tax rates for 2016 and later years. The changes include lowering the rate for the second tax bracket from 22 per cent to 20.5 per cent and introducing a new tax rate of 33 per cent for individuals earning more than $200,000 a year.
The rates for the other tax brackets remain at 15 per cent, 26 per cent and 29 per cent; however, due to indexing of the income tax system, the income thresholds for each rate have changed. The Canada Revenue Agency (CRA) has published the income thresholds in the Jan. 1, 2016, edition of its Payroll Deductions Formulas for Computer Programs (T4127).
Most provinces and territories also index their personal income tax systems and have adjusted their taxable income brackets and personal tax credits in line with consumer price index changes.
Remittances: Effective Jan. 1, new employers may send remittances for CPP, EI and income tax to the CRA quarterly if their monthly withholdings are less than $1,000 and they maintain a perfect compliance record for their Canadian tax obligations. If a new employer qualifies for quarterly remitting, the CRA will notify the employer with its first remittance.
LSVCC tax credit phase-out: The federal government is phasing out a tax credit for labour-sponsored venture capital corporations (LSVCCs). For 2016, the tax credit rate is five per cent and the maximum credit is $240. The government will eliminate the LSVCC tax credit in 2017.
OETC phased out: Effective Jan. 1, employees who perform duties in a foreign country can no longer claim an Overseas Employment Tax Credit (OETC) to reduce their Canadian tax liability. In 2013, the federal government began a four-year phase-out of the tax credit, which reduced the maximum amounts used to calculate the credit every year between 2013 and 2015, with tax credit eliminated as of 2016.
Canada Labour Code changes: Effective Jan., 3, employees covered by the Canada Labour Code may take up to 28 weeks off work, without pay, for compassionate care leave. Previously, employees could take up to eight weeks off. In addition, the government has extended the period within which employees must take the leave from 26 weeks to 52 weeks.
Provincial updates
Alberta
Minimum wage changes are expected in October. Last year, the government said it would raise the general minimum wage to $15 an hour by 2018 and took the first steps by increasing the rate to $11.20 from $10.20. It also promised to eliminate a separate minimum wage rate for liquor servers as of Oct. 1.
British Columbia
Effective Jan. 1, the government increased Medical Services Plan premium rates. For a single person, the maximum monthly premium is $75. For a family of two, it is $136 and for a family of three or more, the maximum monthly premium is $150.
Beginning Sept. 15, the government will index provincial minimum wage rates to increases in the consumer price index for British Columbia for the previous year (rounded to the nearest nickel). The government is expected to announce rate changes in March.
Nova Scotia
Effective Jan. 3, the provincial government increased the amount of unpaid time off work employees may take for bereavement and compassionate care leaves. Employees may now take a bereavement leave of up to five consecutive working days if a family member dies. Previously, employees could take one or three days off, depending on which family member died. For compassionate care leave, employees may now take up to 28 weeks off. Previously, the maximum was eight weeks.
Ontario
The provincial government is moving ahead with plans to set up its own public pension plan. The Ontario Retirement Pension Plan (ORPP) would be funded through mandatory contributions from employers that do not have a comparable workplace pension plan and their employees.
Beginning this year, the Ontario Retirement Pension Plan Administration Corporation will begin contacting employers to determine if they are required to enrol in the ORPP. The government will phase in enrolment and ORPP contributions between 2017 and 2020, beginning with large employers (500 or more employees).
Prince Edward Island
The provincial government has added new unpaid leaves to its employment standards legislation to allow employees to take job-protected time off work if their child is critically ill or has disappeared or died as a result of a crime.
Eligible employees may take up to 37 weeks off work within a 52-week period if their child (under age 18 years) is critically ill. Eligible employees whose child disappears as a result of a probable crime may take up to 52 weeks off work and those who child dies as a result of a probable crime, eligible employees may take up to 104 weeks off work.
To be eligible for the leaves, employees must be employed by their employer for a continuous period of at least three months
Quebec
QPP:
Maximum pensionable
earnings: $54,900
Employer and employee
contribution rate: 5.325 per cent
Basic exemption: $3,500
Maximum annual employer and employee contribution: $2,737.05
QPIP:
Maximum insurable earnings: $71,500
Employee premium rate:
0.548 per cent
Employer premium rate:
0.767 per cent
Maximum annual employee premium: $391.82
Maximum annual employer premium: $548.41
Income tax: There are no personal income tax rate changes for 2016, but due to indexing of the income tax system, income thresholds for each rate have changed. Revenu Québec has also revised its Source Deductions Return (TP-1015.3-V) to incorporate indexing and legislative changes to personal tax credits claimed on the form, including increasing the age at which individuals can claim a tax credit related to their age from 65 years to 66.
Over the next four years, the government will raise the age each year until it hits 70 in 2020.
The threshold for determining whether to use Revenu Québec’s bonus method to calculate income tax source deductions on bonuses and retroactive pay has increased from $14,300 to $14,450 for 2016.
Remittances: Effective Jan. 1, new employers may send remittances for source deductions and employer contributions to Revenu Québec quarterly if their monthly withholdings are less than $1,000 and they maintain a perfect compliance record for their tax obligations. The provincial government made the change to harmonize its tax rules with those of the federal government.
CNT: The maximum amount subject to the levy to finance the Commission des normes du travail increased from $70,000 per employee to $71,500 for 2016.
Workers’ compensation
All boards have now released their maximum assessable/insurable earnings amount for 2016:
Jurisdiction 2016 Maximum
Alberta $98,700
British Columbia $80,600
Manitoba $125,000
New Brunswick $61,800
Newfoundland and Labrador $62,540
Northwest Territories $88,600
Nova Scotia $58,200
Nunavut $88,600
Ontario $88,000
Prince Edward Island $52,200
Quebec $71,500
Saskatchewan $69,242
Yukon $84,837
What to watch for this year:
In jurisdictions that index their minimum wage rates, payroll professionals can expect minimum wage changes this year. Nova Scotia and Yukon change their rates on Apr. 1, while Alberta, Ontario and Saskatchewan do it on Oct. 1. While not indexed, other jurisdictions, such as P.E.I. and Nunavut are also planning wage hikes. Quebec usually increases wage rates on May 1.
Other things to watch for in 2016 include possible federal changes affecting source deductions and labour standards. During the election campaign, the Liberals said, if elected, they would enhance CPP benefits and reduce the EI premium rate to 1.65 per cent for 2017.
The party also promised to amend the Canada Labour Code to allow federally regulated workers to request more flexible working conditions, without fear of reprisal, and to work with other governments to implement similar rights under provincial/territorial labour standards laws.
Provincially, there may be employment standards changes in Alberta and Ontario as a result of recent consultations looking at ways to ensure that the standards reflect today’s work environment.
Federal and provincial/territorial budgets could bring further changes. Governments usually release budgets between February and May, although no jurisdiction other than British Columbia is obligated to bring in a budget on a certain date. B.C. law requires the government to table a budget on the third Tuesday in February every year.
