Small business owners get relief from EI premium rates

Clients who own small businesses and who are worried about upcoming Canada Pension Plan increases got some relief Thursday. The Canada Employment Insurance Commission announced a decrease in employment insurance premiums for 2019.

The 2019 rate will be $1.62 per $100 of insurable earnings, a decrease of four cents from the 2018 rate. For employers, who pay 1.4 times the employee rate, the $2.27 rate per $100 of insurable earnings amounts to an effective decrease of 5.6 cents, the commission said.

The commission sets the premium rate based on a seven-year break-even rate for the EI operating account. It said lower unemployment projections led to the reduction.

In a statement, Finance Minister Bill Morneau and Social Development Minister Jean-Yves Duclos said the rate is the lowest since 1980 and almost 14% lower than in 2015.

The Canadian Federation of Independent Business, which has been lobbying the federal government to delay CPP increases set to start in 2019, applauded the reduced EI premiums.

The new employer rate is five cents lower than last year, the organization said in a statement, and will offset some of the cost increases for employers from the CPP hike.

Other information on the EI premium rate:

• The rate for residents of Quebec covered under the Quebec Parental Insurance Plan will be $1.25 for employees and $1.75 for employers, a five-cent reduction.
• The maximum insurable earnings for 2019 will increase to $53,100 from $51,700 in 2018. 
• For self-employed Canadians who have opted in to the EI program, the annual earnings required in 2018 will increase to $7,121 for claims filed in 2019. 
• The maximum annual EI contribution for a worker will increase by $2.00 to $860.22 (up $2.80 for employers to $1,204.31 per employee). In Quebec, the maximum annual contribution for a worker will decrease by $8.35 to $663.75 (down $11.69 for employers to $929.25 per employee).

Read a summary of the commission’s actuarial report here.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.