Calculating EI Rates for Employee Source Deductions

Revenue Canada’s Employment Insurance (EI) rates* change on January 1st of each year.  As the employer, you withhold a portion of your employee’s salary plus you contribute 1.4 times that amount and remit the total to Revenue Canada.  Here is the formula for EI calculation:  EI = (gross salary x *% = z) + (z x 1.4) = total amount remitted to Revenue Canada.  For EI premium rates, maximums and other details, refer to www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/ei/hstrc-eng.html.

The EI rates for 2013 and calculating instructions are as follows:  Revenue Canada’s EI rate for 2013 is 1.52%.  In Québec, the maximum annual insurable earnings are $47,000; the maximum annual employee premium is $720.48 and the maximum annual employer premium is $1,008.67.  We’ll calculate the formula based on a gross salary amount of $400 per week.

EI = ($400 x 1.52% or $400 x .0152 = $6.08) + ($6.08 x 1.4 = $8.51)

EI = $6.08 + $8.51 = $14.59

$6.08 is the employee’s weekly EI contribution which you withhold from his gross salary.  Therefore, his net salary after you deduct his EI contribution would be $393.00 per week.

$8.51 is the employer’s weekly contribution to Revenue Canada that the employer must contribute from their own pocket for the employee’s EI benefit.

The total of the two above amounts, $14.59, is what the employer submits to Revenue Canada so that your employee will be eligible to collect employment benefits if he is laid-off.  If the month has four weeks, then $14.59 x 4 = $58.36 is what you submit; if the month has five weeks, then $14.59 x 5 = $72.95 is what you submit.  Monthly payments of this Employee Source Deduction can be made directly with the teller at the Caisse Populaire.

Posted in: General Business Information