Tax Question:
What is the Small Business Job Credit and how can I take advantage of it?
Facts:
On September 11, 2014 the Minister of Finance announced the introduction of this credit. It is a two year measure that will help small businesses by lowering their Employment Insurance premiums from the legislated rate in 2015 and 2016.
Discussion:
A corporation is eligible for this credit if it meets all of the following conditions in 2015 and/or 2016.
• The corporation deducted EI premiums from the remuneration it paid to its employees.
• The corporation reported the income and deductions on a T4 slip and filed this information in its RP account for 2015 and/or 2016.
• The total of employer EI premiums the corporation paid for all of its RP accounts in 2015 and/or 2016 was $15,000 or less.
The corporation does not have to apply for the credit and there is no application form to complete. Canada Revenue Agency (CRA) will automatically establish eligibility for the 2015 and 2016 years separately, based on the T4 information that the corporation files for each of those years.
If the corporation is eligible, CRA will automatically calculate the amount of its credit using the EI information from the T4 slips the corporation filed with its 2015 and/or 2016 T4 information returns.
The amount of the credit is calculated using a reduced premium rate for small business for the year in question. If the corporation qualifies CRA will recalculate the EI premium at the reduced small business rate and will issue the refund for the difference, as long as there is no outstanding balance on the corporation payroll account.
If a corporation has more than one payroll program account (RP) under its business number (BN) then CRA will determine if it is eligible to receive a credit by adding the employer EI premiums for all RP accounts under that BN. The amount of credit that each RP account will receive is generally proportional to the amount of the corporation’s EI premiums that was paid into each RP account.
Note that the corporation’s eligibility to receive the credit and the refund amount may be affected if it makes changes to the 2015 and/or the 2016 T4 information on which the credit is calculated. Once the amended, cancelled or additional slips are processed, CRA will recalculate the corporation’s eligibility for the credit and adjust (increase or decrease) the refund amount it may have received.
Recommendation:
If you have any questions about the Small Business Job Credit, please contact Gilmour Knotts Chartered Accountants.
