Plenty of changes to implement and watch for in 2015
It is a new year. For payroll, that means implementing rate changes while also preparing for year-end reporting. To help payroll departments stay up to date, here is a quick look at what is new or upcoming for 2015.
Federal updates
Remittance thresholds:
Some employers will not have to send in source deduction remittances to the Canada Revenue Agency (CRA) as frequently as they used to. As of Jan. 1, the federal government increased the threshold amounts that apply for determining how often an employer must remit source deductions and employer contributions:
The threshold for the category that includes new employers and regular remitters now applies to employers with an average monthly withholding amount (AMWA) of less than $25,000. Previously, the threshold was $15,000. Remittances for Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and income tax deductions taken in a month are due by the fifteenth day of the following month.
The category of threshold 1 accelerated remitters now applies to employers with an AMWA of $25,000 to $99,999.99. Previously, the threshold was $15,000 to $49,999.99. Threshold 1 remitters send in source deduction remittances twice a month.
The category of threshold 2 accelerated remitters now applies to employers with an AMWA of $100,000 or more. Previously, the threshold was $50,000. These employers send in remittances four times a month. The quarterly remitter category continues to apply to employers with an AMWA of less than $3,000.
CPP:
Maximum pensionable earnings: $53,600
Employer and employee contribution rate: 4.95 per cent
Basic exemption: $3,500
Maximum annual employer and employee contribution: $2,479.95
EI:
Maximum insurable earnings: $49,500
Employee premium rate: 1.88 per cent (outside Quebec); 1.54 per cent (in Quebec)
Maximum annual employee premium: $930.60 (outside Quebec); $762.30 (in Quebec)
Employer premium rate: 1.4 times the employee rate unless the employer has a government-approved reduced premium rate
The federal government has created a new EI tax credit for small businesses. The Small Business Job Credit applies for 2015 and 2016 for businesses with employer EI premiums that are no more than $15,000 in those years. Employers eligible for the credit continue to pay their share of EI premiums (calculated at 1.4 times the employee rate of 1.88 per cent). The CRA will calculate the credit by multiplying the employer’s total insurable earnings from its T4 slips by 0.392 per cent.
Income tax:
No federal or provincial/territorial income tax rates have changed, although government budgets could change that. Most jurisdictions index their personal income tax systems and have adjusted their taxable income brackets in line with changes to the consumer price index (CPI).
The CRA has released updated TD1 forms for all jurisdictions. In many cases, the maximum amounts claimed on the forms have changed due to indexing. See chart below for the basic personal amounts that apply for 2015.
LSVCC tax credit
phase-out continues:
The federal government is phasing out the tax credit for labour-sponsored venture capital corporations (LSVCCs) between 2013 and 2016. For 2015, the credit is the lesser of $500 and 10 per cent of the amount deducted or withheld during the year for the acquisition by the employee of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation.
RPP, RRSP limits change:
The maximum contribution rates for 2015 for registered pension plans and registered retirement savings plans have increased:
Money purchase plans: $25,370.00
Deferred profit-sharing plans: $12,685.00
RRSPs: $24,930.00
Defined benefit plans: $2,818.89
2014 year-end reporting:
Information returns must be filed using Internet file transfer or the Web Forms application.
For T4 filing, the CRA has renamed one of the codes used in the Other Information area on the T4. Code 87 is now called Emergency services volunteer exempt amount. Previously, it was named Volunteer firefighter exempt amount.
The CRA changed the name to incorporate legislative amendments that now allow eligible ground, air and marine search and rescue volunteers to claim a non-refundable tax credit, similar to the volunteer firefighter tax credit.
PROVINCIAL UPDATES
British Columbia
Effective Jan. 1, the provincial government increased premium rates for its Medical Services Plan. For a single person, the maximum premium rose from $69.25 per month to $72.00. The maximum premium for a family of two increased from $125.50 per month to $130.50 and for a family of three or more it rose from $138.50 to $144.00.
New Brunswick
Effective Dec. 31, 2014, the minimum wage rate increased from $10 an hour to $10.30. The rate is expected to remain in place for two years.
Newfoundland and Labrador
The provincial minimum wage rate will rise from $10.25 per hour to $10.50 on Oct. 1.
Nova Scotia
For the first time, the province will have a statutory holiday in February. On Feb. 16, Nova Scotia will celebrate Heritage Day.
Ontario
Starting in October, the government will index the provincial minimum wage rate to the province’s CPI. It plans to announce minimum wage changes by April 1 each year.
Quebec
Remittances:
Revenu Québec has changed its remittance thresholds in line with the federal changes.
QPP:
Maximum pensionable earnings: $53,600
Employer and employee contribution rate: 5.25 per cent
Basic exemption: $3,500
Maximum annual employer and employee contribution: $2,630.25
QPIP:
Maximum insurable earnings: $70,000
Employee premium rate: 0.559 per cent
Employer premium rate: 0.782 per cent
Maximum annual employee premium: $391.30
Maximum annual employer premium: $547.40
Income tax:
There are no changes to Quebec provincial income tax rates for 2015, although the provincial budget could propose changes. Quebec indexes its personal income tax system and has adjusted its taxable income brackets in line with changes to the CPI. It has also adjusted the amounts claimed on its Source Deductions Return (TP-1015.3-V) form. For 2015, the basic amount employees can claim is $11,425.
Bonus calculation threshold:
The threshold for determining whether to use the "bonus method" to calculate income tax source deductions on bonuses and retroactive pay has increased from $14,130 to $14,300 for 2015.
CNT: The maximum amount subject to the levy to finance the Commission des normes du travail increased from $69,000 per employee to $70,000 for 2015.
2014 year-end reporting:
The due date for submitting RL-1s to Revenu Québec is Feb. 27, not Mar. 2. (We mistakenly published the Mar. 2 due date in the last issue. We apologize for the error.)
On the RL-1, Revenu Québec has replaced code L-6 (Security option deduction) with two new codes for reporting the deduction that employees can claim for public corporations and Canadian-controlled private corporations: L-9 (Security option deduction under section 725.2 of the Taxation Act) and L-10 (Security option deduction under 725.3 of the Taxation Act).
Minimum wage:
Effective May 1, 2015, Quebec’s general minimum wage rate will go from $10.35 an hour to $10.55. The rate for employees who receive tips will rise from $8.90 an hour to $9.05. The rate for employees in specified sectors of the clothing industry will increase from $10.35 to $10.55
Workers’ compensation
All boards have now released their maximum assessable/insurable earnings amount for 2015 (see chart below).
What to watch for this year:
In jurisdictions that index the minimum wage rate, payroll professionals can expect minimum wage changes. Besides Ontario, a number of other jurisdictions tie minimum wage rate to the CPI. Changes in Nova Scotia and Yukon take place on Apr. 1. Alberta implements minimum wage changes on Sept. 1. Saskatchewan has amended its regulations to index the wage rate, with any changes taking place on Oct. 1 and employers being notified by June 30 each year.
Other things to watch for in 2015 include the passing of bills to establish Ontario’s proposed retirement pension plan and to allow for pooled registered pension plans (PRPPs) in Ontario. PRPP legislation could also be implemented in Alberta, British Columbia, Saskatchewan and Nova Scotia.
On the employment standards front, there may be changes in Alberta based on consultations done last year and a possible review of employment standards in Ontario.
