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Great news for almost 90% of Canadian businesses that pay Employment Insurance (EI) premiums: a tax credit that will reduce EI payroll taxes – and business owners don’t have to do a thing!
What it is:
The Small Business Job Credit will effectively lower the EI premium rate from $1.88 to $1.60 per $100 of insurable earnings. It is available to businesses that pay $15,000 or less in employer EI premiums and is in effect for the 2015 and 2016 tax reporting years.
What to do:
Nothing! Once T4 slips have been filed, the Canada Revenue Agency will calculate the credit for all eligible businesses automatically. Credits will be applied against any outstanding tax debt that exists, and the remaining amount will be refunded to the business.
Where to learn more:
The Small Business Job Credit is forecasted to save small employers more than $550 million in 2015 and 2016 combined. Better still, further cuts are expected in 2017: the EI premium rate should drop to approximately 1.47 for all businesses.