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