Payroll taxes up 1% starting Jan. 1, 2011
Oh boy. If you make about $35k per year, expect $70 extra taken off each monthly pay cheque. That's no small change and works out to $850 per year for that income, I'm sure a lot of struggling families cannot afford. Happy frickin' new year.
I agree with the Canadian Taxpayers Federation and saying that if you haven't used EI, you should pay less over the years, like a true insurance system would work. I've never used it and can't imagine how much of that I paid into it since I started working in high school could have been used for other necessities or whatever I want to use it for. Call me crazy, but maybe like a Super RRSP, we each have our own EI account and are required to pay into it, not a general unmanaged fund. What if, we could invest that money and if we did become unemployed, could then easily tap into that insurance fund?
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7 comments:
Your account would probably be cleared out after 1 month.Don,t rely on your own account for EI or you wont get any.Same thing for your retirement,if you dont take care of yourself now,when you retire good luck with that job at Walmart when your 85
The hike to the maximum one needs to pay into EI is $39 and for CPP it's $54. That's for the entire year, not every month.
I have heard this discussed and read various articles today but no where have I seen any hardfast #s stating $70 per month/under 35,000.
It's the $70. PER MONTH that I'm disputing.
Having said that, INSURANCE in any form, costs money so why do people feel entitled to receive it without participating in the costs?
Some of us work for several decades, paying and never receiving...and never complaining!
Bec
Interesting figure of $70 per month; according to Revenue Canada's payroll deductions on-line calculator, there's no increase for CPP, the EI deduction increases by 33%, and the tax paid decreases because of a raise in the personal exemption. I checked the figures for someone making $36,000 per year and he/she takes home a whopping 75 cents more a month beginning Jan 1, 2011.
Don't take my word for it though, see for yourself. (the site was updated the first week of December, so I expect that the changes listed for 2011 are correct. I've been wrong before though!)
https://apps.cra-arc.gc.ca/ebci/rhpd/handleResults.do
Okay, here's the skinny on CPP and EI:
CPP - the rate itself does not change, being 4.95% of pensionable income for both employee and employer. However, the maximum pay that is covered by CPP rises from $47,200 to $48,300 which means that the MAXIMUM an employee will pay rises from $2163.15 to $2,217.60 or an increase of $54.45 for the whole year. This will ONLY apply to those persons earning more than $47,200 in 2011.
EI - insurable earnings rise from $43,200 to $44,200. This means that anyone earning more than $43,200 will pay more in EI premiums. Confusion arises because no-one seems to be certain what the EI rate will be. It has been 1.73% of insurable earnings for the past three years. If the rate stays the same, then the maximum payable will increase from $747.36 to $780.36 which is an increase of $33.00. Again, only those who earned more than $43,200 will be affected.
HOWEVER, it is possible the EI rate will rise. I have seen various figures posited, with the most common being 1.78%. If this is so, then for every $100 of insurable earnings, you will pay an extra 5 cents.
Interestingly, the CRA website lists only the rates up to and including 2010. Thus, at $36,000 annual wages, you would pay and extra $18 in EI.
Hope this adds clarity to the debate.
My updated payroll program agrees with Francis. The main difference is that once you pass the maximum earnings, it will take a month or so longer for you to think you got a raise. It is not a raise, just no more deductions taken off.
Those small business that don't quit deducting, means one gets an overpaymt on your tax return.
I would like to see a line on the tax return for, have you received EI in the past 5 yrs. If no, claim x000.00. This could be pro rated for each year you did not collect.
I think this year would be a great time to bring back the 5 yr average, as many had good jobs and paid lots of tax and then lost that job a couple of years ago and never got that pay again.
I am having some serious problem in managing accounts, tax and payrolling services for my business. It's basically a small business and I am looking for some cost effective solution for it.
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