Regulations Amending the Insurable Earnings and Collection of Premiums Regulations: SOR/2018-71

Canada Gazette, Part II: Volume 152, Number 8

Registration

April 4, 2018

EMPLOYMENT INSURANCE ACT

P.C. 2018-401 April 3, 2018

The Minister of National Revenue, pursuant to section 108 ^footnotea of the Employment Insurance Act ^footnoteb, makes the annexed Regulations Amending the Insurable Earnings and Collection of Premiums Regulations.

Ottawa, February 19, 2018

Diane Lebouthillier
Minister of National Revenue

Her Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to section 108 ^footnotea of the Employment Insurance Act ^footnoteb, approves the annexed Regulations Amending the Insurable Earnings and Collection of Premiums Regulations, made by the Minister of National Revenue.

Regulations Amending the Insurable Earnings and Collection of Premiums Regulations

Amendment

1 Subparagraph 2(3)(f)(ii) of the Insurable Earnings and Collection of Premiums Regulations ^footnote1 is replaced by the following:

• (ii) to increase the special benefits payable to the person under the Act, except those payable under sections 21 and 152.03 of the Act, to the extent that the payment meets the criteria set out in section 38 of the Employment Insurance Regulations, or

Coming into Force

2 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Employment Insurance Act (the Act) provides temporary income support to workers in special circumstances such as pregnancy, parental and compassionate care benefits (referred to as special benefits). When an employer makes supplemental payments (top-ups) to individuals who are receiving these special benefits, the top-ups are generally not included in insurable earnings for employment insurance (EI) purposes. This means that neither the employer nor the employee pays EI premiums on the amount of the top-up.

Each time the Act was amended to provide for a new special benefit, consequential amendments had to be made to the Insurable Earnings and Collection of Premiums Regulations (the Regulations) in order for the new benefit to be administered in the same manner as the other special benefits mentioned above. The amendment to the Regulations described below ensures that top-up payments for two new EI special benefits are not included in insurable earnings for EI purposes. However, it does so by replacing references to specific special benefits with more generic wording. This new wording eliminates the need to amend the Regulations each time a new special benefit is added to the Act.

Critically ill adults

The Act was amended by An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures (royal assent granted on June 22, 2017) to create a new type of EI special benefit for family members caring for an adult who is critically ill. The amendment to the Regulations ensures that top-up payments related to this new benefit are not included in insurable earnings for EI purposes.

Critically ill children

A new benefit for parents of critically ill children (the PCIC benefit) came into effect on June 9, 2013, pursuant to an amendment of the Act by the Helping Families in Need Act (royal assent granted on December 14, 2012). However, when other consequential regulatory amendments were made, the amendment to the Regulations to ensure that top-up payments are not included in insurable earning for EI purposes was omitted. As a result, from a legal standpoint, employer top-ups to the PCIC benefit were unintentionally included in insurable earnings for the period from the effective date of the PCIC benefit until the date that this proposed amendment is registered.

However, from an operational standpoint, there is a very low risk that EI premiums were paid in respect of these top-up payments because of the following:

• — the policy intent for the PCIC benefit is the same as for pregnancy, parental and compassionate care benefits;
• — guidance on the Government of Canada website about the PCIC benefit indicates that top-ups are not included in insurable earnings; and
• — the Canada Revenue Agency (CRA) found that no EI premiums have been assessed as owing on PCIC top-up payments.

Objectives

• — To exclude from insurable earnings top-ups to the benefits for family members who care for a critically ill adult and for parents of a critically ill child;
• — To respect the intent that the benefits for family members caring for a critically ill adult and for parents of a critically ill child be administered in the same manner as the other special benefits mentioned above; and
• — To bridge the existing legislative gap since 2013 with respect to the benefits for parents of a critically ill child.

Description

Subparagraph 2(3)(f)(ii) of the Regulations is amended to remove references to specific benefits and replace them with a generic reference to special benefits payable under the Act. As a result, employer top-up payments to individuals receiving the PCIC benefit or the new benefit for family members caring for a critically ill adult are not included in insurable earnings. This amendment will take effect on the day it is registered.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this amendment, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this amendment, as there are no costs to small business.

Rationale

The amendment to the Regulations ensures that the benefits for family members caring for a critically ill adult and parents of a critically ill child operate as intended. Specifically, this means that top-ups to these benefits are not included in insurable earnings for EI purposes and no EI premiums are payable on those top-ups.

The amendment to the Regulations has no cost impact on employers, employees or the government. The policy intent is that top-up payments not be included in insurable earnings and that no EI premiums be payable on them.

It was never expected or planned that the Government of Canada would receive premiums on employer top-ups to the PCIC benefit. Therefore, correcting the past omission does not affect the funding of the EI program.

Implementation, enforcement and service standards

With respect to the PCIC benefit, there is no legislative authority to allow retroactive application. As a result, the amendment to the Regulations applies from the date of registration onward. The CRA’s assessment is that it is likely that no EI premiums have been paid on PCIC top-up payments. All public information indicates that no premiums should be paid and the CRA has administered the PCIC top-up payments accordingly. No action is needed for the period before the effective date of this amendment.

However, if the CRA determines that EI premiums have been paid on PCIC top-up payments, the Minister of National Revenue will take immediate steps to seek Governor in Council approval to remit the payments.

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