An opportunity or a jail-house?
The federal government has initiated new rules in Employment Insurance which now apply to the self-employed– both in proprietorships and in limited companies. Starting January 2010, the self-employed can voluntarily opt into a segment of the EI system, being the “special benefits” provisions which include:
- Maternity benefits for up to 15 weeks that surround the birth date
- Parental benefits for up to 35 weeks after birth or adoption (which can be shared between the parents)
- Sickness benefits up to 15 weeks due to illness
- Compassionate care benefits up to 6 weeks whilst on leave supporting a family member in ill health with a significant risk of death
The self employed must opt in at least 12 months prior to claim, and their self-employed earnings in that period must exceed $6,000. Only the employee portion is owing (ie there is no required matching of an “employer” component); therefore, the premium is 1.73% to a (present) maximum of $747 per year.
The “jail-house” effect is that once you opt in, you are committed for the duration of the tax year. Furthermore, if you have claimed an EI benefit, you are committed for life! Or until you cease self-employment. So, do the math carefully before you commit!