Automobile benefit source deductions, applying for a reduced EI premium rate
Question: Do we have to pay employees a higher hourly rate for working on a Sunday?
Answer: There are no requirements in any employment/labour standards laws across Canada that require employers to pay employees more for working on a Sunday. It may be required by a collective agreement or an employment contract. If the employee is working overtime hours or working on a statutory holiday, there may be additional payment requirements.
Source deductions on automobile benefits
Question: We have just started providing automobile taxable benefits for employees. I know I have to include the benefit when calculating income tax deductions, but is it also included for Canada Pension Plan/Quebec Pension Plan (CPP/QPP) contributions, employment insurance (EI) and Quebec Parental Insurance Plan (QPIP) premiums?
Answer: If an employer makes an automobile available for an employee’s personal use, the employee has a taxable benefit.
The taxable benefit is made up of a standby charge (the benefit that applies simply by virtue of the automobile being available to the employee for personal use) and the operating costs (the benefit that applies if the employer or a person related to the employer pays any of the vehicle’s operating costs) minus any amount the employee reimburses the employer for the standby charge or operating expense benefits.
The taxable benefit is subject to
C/QPP contributions and income tax deductions, but not EI or QPIP premiums. Please note “personal use” refers to using the vehicle for non-work trips. This includes travel between home and work, and driving to carry out personal business and vacations.
The Canada Revenue Agency (CRA) does not consider it to be personal driving if the employer allows or requires the employee to drive directly from his home to a point of call other than the employee’s regular workplace or to drive home from that point.
Applying for a reduced EI premium rate
Question: We offer a short-term disability plan for our employees. I understand I can apply for a reduced EI premium rate because of the plan. What do I need to do to apply?
Answer: Service Canada can reduce an employer’s rate under its EI Premium Reduction Program if the employer provides its employees with a short-term disability plan that meets specified criteria and is registered with Service Canada.
To qualify for the program, the employer must provide employees with either a weekly indemnity plan or a cumulative paid sick leave plan that:
• provides benefits that are equal to or better than the amount workers would receive under EI (the benefit rate for most EI claimants is currently 55 per cent)
• starts paying benefits to employees no later than 15 days after illness or injury
• allows employees to claim benefits within three months of being hired
• protects employees 24 hours a day, whether or not they are at work
• does not allow employees to claim EI benefits as part of the plan’s disability payments.
In addition to these conditions, Service Canada requires that the plans fulfill additional criteria specific to the type of plan.
Service Canada also requires employers share nearly 42 per cent of the EI premium reduction with employees covered under the plan. The savings may be passed along as cash or in the form of new or improved benefits
To apply for a reduced premium, employers must complete the form from Service Canada’s website called Application for Employment Insurance Premium Reduction and send it to the EI Premium Reduction Program.
Along with the form, employers must submit a copy of the short-term disability plans they want to register, as well as a copy of a collective agreement or written agreement between the employer and employees on how they will share the reduced premium if such an agreement already exists.
Instead of completing the form, employers may send a written request on their letterhead to the EI Premium Reduction Program, including information on their short-term disability plan and how they will share the premium reduction with employees.
Program officials will notify employers whose plans have been approved of their premium reduction and when it will apply.
Annie Chong is the manager of the payroll consulting group at Carswell, a Thomson Reuters business. She can be reached at [email protected] or (416) 298-5085. Visit www.carswell.com for more information.
