EI for the self-employed

Written by Stephanie Bergeron, CPA on Jul. 23, 2019

An advantage to being self-employed is that you don’t pay into Employment Insurance (EI) like employees do.

However, a program was introduced in 2010 which allows self-employed individuals to opt in to pay Employment Insurance (EI) premiums. Now that this has been in effect for a number of years, let’s revisit some of the key things you need to know before opting into the program.

Voluntarily paying EI allows you to qualify for special benefits including:

–          Maternity benefits (for mothers who give birth)

–          Parental benefits (for any parent to care for their newborn or newly adopted child)

–          Sickness benefits (for those who cannot work due to injury or illness)

–          Compassionate care benefits (for those who need to be away from work to care for or support a family member who is ill)

–          Parents of critically ill children benefits (for parents who need to care for critically ill or injured children)

Opting into EI allows self-employed individuals to obtain some of the benefits they would not otherwise receive. However, it is important to note that you will not be able to claim regular EI benefits. This is because the premiums paid under this program do not cover the employer portion of EI premiums that regular employees pay.

How much are the premiums?

In 2019, $1.62 for every $100 you earn, to a maximum of $860.22. This matches the maximum that regular employees pay, so there are no additional premiums for being self-employed. This limit is indexed annually and set by the government each year.

Payments are due by April 30 of the following year you opt into the program. EI premiums can be paid with regular income tax instalments in the years following.

EI premiums must be paid on your income earned for the entire year, regardless if you register for the program at the beginning or end of the year.

What benefits would you receive?

The weekly benefit amount is 55% of your average weekly earnings based on the last tax return filed before you applied for benefits. The maximum amount collectible in 2019 is $562 per week.

Any earnings made while working part-time will be deducted from the benefit.

Other considerations:

–          You need to wait one year until after you register for the program to be able to apply for benefits, meaning you won’t receive benefits for at least one year.

–          If you change your mind, you can cancel within 60 days of registering without having to pay any premiums.

–          You can also cancel your registration in the program after 60 days as long as you haven’t received any benefits, but will still have to pay EI premiums on any self-employed income for the rest of the year.

–          Once you begin claiming benefits, your registration in the program is permanent. You must continue to pay premiums for as long as you continue to be self-employed.

–          You must have had a minimum of $7,121 of earnings in 2018 in order to qualify for claims in 2019.

As every personal tax situation is unique, be sure to check with your accountant before registering for this EI program.

If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.

Thanks to Stephanie Kwan of KWB Chartered Professional Accountants for providing this content.

Stephanie Bergeron, CPA

Stephanie Bergeron, CPA

Manager

Stephanie graduated from the University of Alberta in 2012 with a Bachelor of Commerce Cooperative Education degree in Accounting. After a few years of working in the world of GST/HST, she decided to go into public accounting and joined the KWB team in 2014. In 2015, Stephanie passed the Chartered Professional Accountants Common Final Evaluation, becoming one of the first to graduate from the CPA Professional Education Program in Alberta. She finally received her designation in 2017. In her spare time, Stephanie enjoys baking and sharing those treats with family and friends.

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