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Bits and Bytes of New Legislation for 2012

Canadian PayrollHere is some information that is new for 2012, that may be of interest.  We hope that by blogging about some of the changes in Canadian payroll to keep our readers informed.  This is by no means identifying all of the changes for 2012, but some of the highlights.  For more information on legislative changes for 2012 please leave a comment or contact our office.

Wage Loss Replacement Plan Payments

Under new legislation that passed in December 2011, payments from an employer-funded Wage Loss Replacement Plan (WLRP) are considered employment income and therefore, are subject to Canada Pension Plan (CPP) contributions. Employers who have not withheld CPP on employer-funded WLRP payments in the past should start withholding CPP contributions on these amounts effective January 1, 2012.

 

Hiring Credit for Small Business

Are you eligible for a one-time Hiring Credit for Small Business?   Intended to provide relief for small businesses, the credit is applied towards the employer's portion of the employment Insurance premium.  To find out more, go to Hiring Credit for Small Business.

 

New Prescribed Interest Rates to be Used for the Period Jan 1, 2012 to Mar 31, 2012

The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
The interest rate to be paid on corporate taxpayers overpayments will be 1%.
The interest rate to be paid on non corporate taxpayers overpayments will be 3%.
The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.

 

Auto Rates for 2012

The limit on deduction of tax exempt allowances paid by employers to their employees for using their personal vehicles for business purposes has been increased by $0.01.

For the first 5,000 business kilometers, the rate is $0.53
For each additional Kilometer the rate is $0.47
The allowance for Nunavit, the Yukon and the Northwest Territories, the rate is $0.04 higher.

 

Reduced Employment Insurance (EI) Rates

Under existing rules and regulations, employers are permitted to reduce the employer share of EI premiums when they have a qualified short term disability plan.

For Canada, other than Quebec the rates are as follows:

Category 1 1.252
Category 2 1.181
Category 3 1.187

For Quebec - the following rates apply to employers who deduct QPIP premiums from all of the employees paid under the business number assigned to a specific reduced rate:

Category 1 1.216
Category 2 1.128
Category 3 1.135
Category 4 1.114

Where not all of the employees paid under a specific business number assigned a reduced rate are subject to the reduced rate, then you have to recalculate the rate based on a percentage of those who are subject to the reduced rate.