Changes in payroll laws and regulations from across Canada
Federal
New income tax rates expected for 2016
Canada’s new Liberal government is proposing to implement new personal income tax rates next year.
During the recent federal election campaign, the Liberals promised to reduce the tax rate for the second tax bracket (meaning annual taxable income between $44,701 and $89,401) from 22 per cent to 20.5 per cent and to introduce a new tax rate of 33 per cent for individuals earning more than $200,000 a year. Currently, the highest tax rate, 29 per cent, applies to taxable income over $138,586.
Government House leader Dominic LeBlanc says one of the government’s first priorities will be to table a bill to implement the tax changes for 2016. Speaking to the media after the new government’s first cabinet meeting in early November, LeBlanc said he expects the income tax amendments to be tabled shortly after Parliament opens on Dec. 3.
The government is expected to keep rates for the other tax brackets at 15 per cent, 26 per cent and 29 per cent; however, due to indexing of the income tax system, it will revise the income thresholds for the rates.
Reduced EI premium rates confirmed
Service Canada has confirmed the 2016 reduced employment insurance (EI) premium rates for employers taking part in the federal government’s EI Premium Reduction Program.
The program provides lower EI premium rates for registered employers that have government-approved short-term disability plans. The regular premium rate for employers not participating in the program is 1.4 times the employee rate.
For 2016, the reduced rates are:
1.296 for category 1 plans
(1.271 for Quebec employees),
1.216 for category 2 plans
(1.173 for Quebec employees),
1.219 for category 3 plans
(1.177 for Quebec employees),
1.203 for category 4 plans
(1.156 for Quebec employees).
The category refers to the group to which the government assigns an employer, based on the type of wage-loss replacement plan the employer has set up.
Manitoba
WCB to phase in new assessment rate model
The province’s Workers Compensation Board (WCB) says it will phase in a new assessment rate model between 2018 and 2020. To help pave the way, the WCB will implement rate-setting changes in 2016 and 2017.
The board says the new model is the result of a review of the assessment system done in 2014.
"Over the next five years, we’ll be phasing in changes to create a system that balances individual employers’ claims experience with collective liability," said WCB president and CEO Winston Maharaj.
The new model will include the following features:
• A new experience factor will give different weights to an employer’s claims cost experience, depending on its size. This is different from the current model, which treats all employers the same. Under the new model, a large employer’s individual cost experience will have a greater impact on its premiums, while for small- and medium-size employers, the industry they are in will have a greater impact on their premiums than their own experience.
• The board will reduce the number of risk category ranges, resulting in a smaller range of potential rates above and below the average for the category in which the board places an employer. The industry’s risk category controls the minimum and maximum rates that an employer can pay. Currently, the range between the risk category upper and lower boundaries is the same regardless of an employer’s size. Under the new model, the size of the range will vary depending on an employer’s size. The board will allow the rates for large employers to move higher and lower than the rates for small or medium employers.
• The board will cap annual rate changes at 15 per cent upward or downward, reducing rate volatility. Currently, the rate can move upwards quickly with poor claims experience (30, 40, or 50 per cent) and move down much more slowly with improving experience.
• An employer’s claims experience will include three years of costs for claims incurred over the last three years instead of the current system, which is based on 12 months of costs for claims incurred in the last five years.
• The board will implement more risk categories and allow employers to move more frequently among them as their experience changes. The board says it will implement clear criteria for moving from one category to another and will monitor them to ensure they reflect real changes in underlying risk.
"We recognize that there are differences among small, medium and large employers, and we want to be responsive to their unique circumstances," Maharaj said. "Overall, the changes we’re making will lead to a system that is less aggressive and more in line with the rest of Canada."
Ahead of the new model, the board is introducing some changes to the current model for 2016, including beginning to reduce risk category ranges. For all employers, the board will reduce the upper boundary from 200 per cent to 120 per cent above the category average.
For small and medium employers, the WCB will change the lower boundary in 2016 from 40 per cent to 30 per cent below the category average. In 2017, it will revise it again to 20 per cent.
The board also says it will cap rate changes, whether upwards or downwards, at 15 per cent in 2016; however, it notes that due to other factors in the current rate model, some employers might still see their rates change by more than 15 per cent in 2016 and 2017.
Nunavut
Minimum wage going up
The Nunavut government plans to raise the territory’s minimum wage rate next spring. Effective Apr. 1, 2016, the government says it will increase the minimum wage rate from $11 an hour to $13.
Prince Edward Island
WCB to eliminate wait period for benefits
Prince Edward Island’s Workers Compensation Board (WCB) says it will eliminate a two-day waiting period that injured workers must serve before it pays them benefits.
If required legislative amendments are passed in time, the change will take effect Jan. 1, 2016.
"The WCB is now in a healthy financial position, making it an ideal time to offer these additional benefits to workers," said WCB CEO Luanne Gallant .
The board implemented a waiting period in 2002 in an effort to help it become fully funded, which it is required to do to pay for past, present and future claims for injured workers. The waiting period was initially three days. The board reduced it to two days in 2014.
