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2017 Employer and Employee Payroll Tax Changes

2017 ushered in a number of significant tax changes. The one most employees will notice and which most employers will administer is the income-tax cut for middle-income earners, coupled with a tax rate increase for higher-income earners. But this was not the only change you will notice on a pay stub. If you want to keep on top of changed, you can do so through the CRA’s new Podcasts (or if you want them translated into every-day language, come see Faris CPA’s professionals).

2017 also sees changes to the Employment Insurance deduction and the Canada Pension Plan deduction (see for example the Ontario rate table). For example, there is a new, seven-year break-even, calculation for EI premiums that may save those earning more than $51,300 per year a bit of money. There are also lower premiums for workers and employers, and some small employers may qualify for an additional premium deduction. Since the maximum amounts for both the EI and the CPP are indexed to inflation, these maximums will increase slightly in 2017. To make this simple, the CRA provided Federal and Provincial tax deduction tables (for example, see the 26 pay periods a year table (bi-weekly pay) here).

Indexation to inflation is not limited to EI and CPP limits. The basic personal amount (the spouse or common-law partner amount or the amount for an eligible dependent), the federal income tax bracket thresholds, and a number of other tax credits will increase by 1.4 percent in 2017. For example, the Canada employment credit has been indexed and will increase to $1,178 for 2017. You have to remember that, if you are in Quebec EI works differently than it does in the rest of the country. That said, the rates in Quebec are still down in 2017.

What this means is that employers will not have to pay as much, in total, for employee contributions, saving them money in 2017. Similarly, most employees will see more money in their pockets, even if they didn’t get a raise in 2017 (combined effect of lower EI and CPP, higher basic personal amount, and increase in tax bracket thresholds).

pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.

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Sam Faris reduced the significant unreported income based on net worth audit to be nil. Sam’s approach in fighting these types of complex audits is unique and sophisticated. He found countless mistakes made by the auditor which were rectified when Sam appealed the audit decision. Instead of owing significant amount of taxes, Sam reduced it to zero. I highly recommend to hire Sam for this type of audits and any CRA problem.”

E.M., Ottawa
pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.