Guide to Global Payroll Management

The additional contribution rates included in the proposed legislation consist of the following:
Year

Employee rate

Employer rate

2019

0.15% (5.55%)

2020

0.30% (5.70%)

2021

0.50% (5.90%)

2022

0.75% (6.15%)

2023

1.00% (6.40%)

A second additional contribution rate of 8% (4% employee and 4% employer contributions) of
the income in excess of the maximum pensionable earnings will come into effect in 2024.
For the year 2024, the amount of the Additional Maximum Pensionable Earnings will be equal to
107% of the Maximum Pensionable Earnings for the year. For the year 2025 and each
subsequent year, the amount of the Additional Maximum Pensionable Earnings will be equal to
114% of the Maximum Pensionable Earnings for the year.
The CPA will be monitoring developments related to the progress of this legislation and will
advise its members accordingly.
CALCULATING EMPLOYMENT INSURANCE (EI) PREMIUMS
Employees and employers pay EI premiums on remuneration from insurable employment.
Insurable employment includes most employment in Canada under a contract of service. If the
employee is employed in insurable employment, the employee's insurable earnings are subject to
EI premiums until the annual maximum is paid. As a result of the implementation of the Quebec
Parental Insurance Plan (QPIP) in the province of Quebec that came into effect on January 1,
2006 there are two EI rates; one EI rate for the province of Quebec and the other EI rate for the
rest of Canada.
The EI rate for employees outside of Quebec for 2020 is 1.58% of insurable earnings. The
employer rate is 1.4 times the employee's premiums or 2.212% (1.58% x 1.4) of the insurable
earnings. The EI rate for employees in the province of Quebec for 2020 is 1.20% of insurable
earnings. The employer rate is 1.4 times the employee's premiums or 1.680% (1.20% x 1.4) of the
insurable earnings.
Employee's EI premiums are calculated by multiplying the insurable earnings, up to the annual
maximum for the year, by the EI rate. The annual maximum insurable earnings on which
premiums are deducted for 2020 are $54,200.00. The maximum employee premium for 2020 for
employees outside of Quebec is $ 856.36 ($54,200.00 x 1.58%). For employees within
Quebec, the maximum employee premium is $ 650.40 ($54,200.00 x 1.20%).
It is necessary to track the insurable earnings beyond the annual maximum for an employee. In
order to accurately complete an ROE, the total insurable earnings need to be reported. This
includes earnings in excess of the annual maximum insurable earnings on which the premium is
deducted. The annual maximum insurable earnings are used only for determining the maximum
premiums to withhold.

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Guide to Global Payroll Management - 2020

Table of Contents for the Digital Edition of Guide to Global Payroll Management - 2020

Guide to Global Payroll Management - 2020 - 11-34

Guide to Global Payroll Management - 2020

Table of Contents for the Digital Edition of Guide to Global Payroll Management - 2020