Will you get money back through the Small Business Job Credit?

If you have a small business with employees, you could be getting some money back after you file your T4 information.  In September, 2014 the federal government announced the Small Business Job Credit; a new initiative applicable for 2015 and 2016 that reduces employer EI premiums.  Before discussing how it all works, let’s figure out if you’re eligible.

Eligibility criteria:

To obtain the Small Business Job Credit you have to meet all of these conditions in 2015 and/or 2016:

  • you deducted employee EI premiums and remitted them along with your employer share of EI premiums;
  • T4 slip(s) and summary are filed; and
  • employer EI premiums paid for all of your RP accounts was $15,000 or less.

You qualify, what’s the credit and how do you get it? 

The credit applies to the employer portion of the EI premium and reduces the premium by $0.28 per $100 (from $1.88 to $1.60).  When you file your T4 information (due the last day of February), the CRA will determine if you’re eligible.  In other words, you don’t need to apply for the credit; it will be calculated automatically.  Once calculated and processed, the credit will be refunded to you, unless you have an outstanding balance on your payroll account.  If there is a balance, the credit will first be applied to the balance and any remaining amount will be issued as a refund.

How do you record the credit in your financial statements? The credit should be recorded as income or a reduction of your EI expense when you file your business return for the year in which you received the credit. For example, if you receive $300 in 2016, record the credit to either the salary & benefits or other income account on your income statement.

For more information on this credit, check out the CRA website: http://www.cra-arc.gc.ca/whtsnw/tms/sbjc-eng.html



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