Don’t Pay Unnecessary Employment Insurance Premiums

Wages paid to some shareholders and family members are not insurable, and these employees cannot collect employment insurance benefits.

a.    You may not have to pay EI premiums for employed family members.

The Employment Insurance Act S. 5(2)(i) states that employment is not insurable if the employer and employee are not dealing with each other at arm’s length (determined in accordance with the Income Tax Act)

b.    Shareholder’s wages may not be insurable.

S. 5(2)(b) of the Employment Insurance Act states that “the employment of a person by a corporation if the person controls more than 40% of the voting shares of the corporation” is not insurable employment.

For more information visit the Tax Tips website

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