1. Session Title: Canadian Payroll
Presented by: David Reichert
Date: October 13, 2017

2. Presenter
David Reichert
President
PSI Payroll Services Inc.

3. Why Canadian Payroll? 1 or more employees resident in Canada
US based employees traveling to Canada frequently to work
Canadian residents working in the US and being paid equalization amounts (ex-pat employees)

4. Getting Started with Canadian Payroll
First Steps
Determine if you should establish an entity in Canada
Register with Canada Revenue Agency to obtain a Business Number and the relevant sub-accounts
Register with the provinces where business will be conducted to establish extra-provincial corporation
Register with the provincial Workers Comp agency in provinces where employees will be situated

5. Key Differences Between the US and Canada
Key Differences between US and Canada
Employee Status (no exempt/non-exempt)
Statutory Holidays (9 to 10 days/year)
Vacation time (minimum 2 weeks)
Vacation pay (no use it or lose it)
Pay frequency- minimum twice/month in most jurisdictions
Terminations (no at will employment)
Notice period or Pay in lieu
Severance pay / Retiring allowance
Record of employment-required

6. Determining the Province of Employment/Taxation

7. Determining the Province of Employment/Taxation
Employee’s province of employment may differ from their province of residence, the province which they are covered for employment standards and workers compensation
Province of Employment is either where the employee reports to work or where the business is located and from where the employee’s wages are paid.

8. Determining the Province of Employment/Taxation
Employees working in Canada for a company that does not have a business establishment in Canada are considered to be employed “beyond the limits of any province”, taxation code ZZ
Very important with regard to provincial obligations, especially for employees resident in Quebec.

9. Statutory- Government Pension, Employment Insurance, Tax
Payroll Deductions
Statutory- Government Pension, Employment Insurance, Tax
Mandatory- Garnishments, Company benefit plan, Union
Voluntary- RRSP (401K), Supplementary benefits, etc

10. Calculating Canada/Quebec Pension Plan Contributions (CPP/QPP)
FOR 2017
Year’s Maximum Pensionable Earnings
$ 55,300.00
Year’s Basic Exemption (per employer)
$ 3,500.00
Contributory Earnings
$ 51,800.00
CPP/QPP Rate
4.95% / 5.40%
CPP/QPP Year’s Max EmployEE Contribution
$ 2, / 2,797.20
CPP/QPP Year’s Max EmployER Contribution

11. Contributions must be deducted if an employee:
CPP/QPP Contributions
Contributions must be deducted if an employee:
Has pensionable earnings
Has reached age 18 and is under age 70. No age maximum in Quebec.
Is between the ages of 60 and 70*, and receiving CPP/QPP retirement pension. (*After 65 an employee can submit a CPT30 form to the employer to elect to stop deductions)
Is not receiving disability benefits from the CPP/QPP plan

12. Employment Insurance FOR 2017 FEDERAL EI QUEBEC EI QPIP
Year’s Max Insurable Earnings
$ 51,300.00
51,300.00
72,500.00
Year’s Max EmployEE Contributions $
651.51
397.30
EI/QPIP Rate
1.63%
1.27%
0.548%
Employer rate 1.4 x Employee Rate
2.282%
1.778%
0.767%
Year’s Max EmployER Contributions
$ 1,302.84
1,067.22
547.40

13. EI Employer Premium Reduction
Employer premium rate of 1.4 x employee contribution can be reduced if there is a short term disability program in place that meets certain criteria – including sharing benefit reduction savings with employee.
Will require a second business number to report those employees on premium reduction plan.
Plan no longer needs to be approved annually by HRSDC

14. Quebec Parental Insurance Plan (QPIP)
provides temporary financial maternity, paternity, parental, and adoption benefits to eligible Québec residents who take time off work and have an interruption of earnings.
For Québec residents only, QPIP coverage only applies to the above benefits rather that EI. EI continues to cover other benefits such as regular, sickness and compassionate care.

15. Other Taxation Issues- Employee
Bonus Taxation Method applied to bonuses, pay in lieu of notice, vacation pay- employee’s highest marginal tax rate
Severance/ Retiring Allowance taxed at lump-sum rates (10, 20 or 30%)determined by the size of payment.
Commissions are taxed taking into account expenses eligible for deduction against earned income.

16. Other Taxation Issues- Employer
Provincial Health and Education Taxes in Quebec, Manitoba and Newfoundland
Employer Training ( Quebec Workforce Skills Development Fund) – payroll over $2 million
Employee Medical Premiums in BC- often paid by employers

17. Approximate 2017 Employer Cost
CPP/QPP $ / $
EI Can / QC $ / $912.11
QPIP QC only $556.08
Health Tax Ontario 1.95% of ON payroll over $450,000
Health Tax Quebec 4.26% of all Quebec payroll
Workers Comp industry and province specific rates

18. Vacation (PTO)
In most cases, employees start at minimum 2 weeks (trend to 3 weeks)
Generally it is accrued the year before they are entitled to take it
In most jurisdictions, pay out of vacation time is discouraged/non-compliant – intent is for employees to have paid time off

19. Statutory Holidays
All employees must be paid normal wages
Employees working an holiday must be paid time and a half, plus holiday pay

20. Statutory Holidays
January 1- New Year’s Day
2nd or 3rd Monday in February in most provinces
Good Friday
3rd Monday in May, Victoria Day
June 24, Quebec only
July 1, Canada Day
1st Monday in August, most provinces
1st Monday in September, Labour Day
October- Thanksgiving Day
November 11- Remembrance Day- most provinces
December 25- Christmas day
December 26- Boxing Day- Ontario only

21. Supplementary Health, Dental, Disability Etc.
Other Benefits
Supplementary Health, Dental, Disability Etc.
Certain premiums are taxable benefit, eg: group term life, AD&D
All employer paid premiums are taxable benefit in Quebec
No coverage is mandatory

22. Other Benefits RRSP Tax protected savings plan- similar to 401k
Employer contributions are taxable benefit
Both employee and employer contributions are tax deductible within annual limits
Severe penalties for over-contribution
Employee responsible for monitoring limits

23. Terminations Rules are similar but do vary by province
Generally 1 week per year of service is minimum notice required
Each province has slightly different rules re timing of final payments
Record of Employment must be issued within 5 days of termination
Minimum payments as set out in Employment Standards may be completely unacceptable if employee chooses legal challenge

24. Employee or Self-employed
Criteria used to decide status:
Subordination in the performance of work
Financial or economic criteria
Ownership of tools
Integration of tasks carried out by worker

25. Year-end Issues
T4 and Quebec Releves must be filed and distributed to employees by February 28
Provincial Workers Comp annual reconciliations due February 28 except March 15 in Quebec and March 31 in Ontario
Ontario Employer Health Tax annual retrun due March 15

26. Year-end Issues
Expect notifications of any changes for CRA, RQ or Workers Comp remitting schedules or rates by December 1
If applicable Reduced EI rate for following year will be sent before end of year
Very important to note all of above and advise payroll provider to avoid penalties.

27. Year-end Issues
Beginning with 2017 year-end, T4s and RLs can be distributed electronically without requirement of employee permission

28. Canadian Payroll Overview
Presented by
David Reichert
President
ext 222

29. Thank You!