Employment Insurance for the Self-Employed

Did you know that self-employed individuals can now apply for Employment Insurance?

Changes in the Employment Insurance Act recently enacted have made it possible for self-employed taxpayers to opt in to the EI program. Since January 1, ,2010, if you are a Canadian citizen or a permanent resident you can register with the EI program and pay premiums. In order to qualify for benefits you must earn a minimum of $6,222 per year.

The premiums are identical to those paid by employees. For 2012 they are equal to 1.83 percent of your self-employed earnings (1.47 percent in Quebec). The maximum annual premium is $839.97 ($674.73 for Quebec), based on maximum annual earnings of $45,900.

Self-employed individuals are not required to pay any employer portion of EI premiums, and the amounts paid are eligible for a non-refundable tax credit.

If you opt in to the program you would be eligible for maximum benefits of 15 weeks for maternity leave, 35 weeks of parental/adoptive  benefits, 15 weeks of sickness leave and 6 weeks of compassionate care benefits.

You must be registered and paying premiums for at least one year prior to making any claim for benefits. In order to qualify for benefits you must have an “interruption of earnings” which is defined as a more than 40 percent reduction in the time devoted to your business activities as a result of pregnancy, illness, injury, quarantine, the need to care for certain children or the need to provide care or support to certain family members. The 40 percent reduction is based on your “normal level” of time devoted to your business.

You would be entitled to benefits of up to 55 percent of your average weekly earnings to a maximum for 2012 of $485 per week.

If you register, you can decide to opt out at any time in the future, provided you have never made a claim for benefits. Otherwise, you must remain in the program for as long as you remain self-employed.

In Quebec, self-employed taxpayers are automatically required to participate in the Quebec Parental Insurance Plan (QPIP) which provides additional benefits to self-employed persons who sustain an interruption of earnings due to maternity leave, paternity leave, parental leave or adoption leave.

One thought on “Employment Insurance for the Self-Employed

  1. A bad bad idea – costly, stuck for life if you claim, and any earned income in the year that you claim will be taxed back – even if it was entirely earned before you asked for benefits. Don’t, I repeat don’t, enrol in this EI trap, especially with EI so-called premiums slated to rise for the next 4-5 years.

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