Canadian Payroll Reporter - sample

2 News advocacy. For us that's not just a buzzword. What we do in advo- cacy arms us with knowledge to add to our education products." One of the biggest advocacy successes this year, Culhane says, was convincing the Ontario gov- ernment to delay implementing its Ontario Retirement Pension Plan (ORPP) by one year. The government had planned to begin employer and employee ORPP contributions in 2017, but agreed to hold off until 2018 to give employers, payroll service providers and software develop- ers more time to prepare. Even though the Ontario gov- ernment says it will scrap the ORPP now that the federal and provincial governments (exclud- ing Quebec) have agreed to en- hance the Canada Pension Plan (CPP), the implementation delay saved companies a lot of time, ef- fort and money, says Rachel De Grâce, CPA's manager of advo- cacy and legislative content. "It is a good thing that we were successful (in getting the delay) because we would have hated for employers, payroll service pro- viders and software developers to have already started spending hundreds of thousands of dollars in resources on building a plan that is now ultimately never go- ing to come to fruition," she says. Lengthy history Over the years, the association's advocacy has evolved from just reacting to government changes to proactively helping to shape payroll-related rules. "Now we are asked for input before they finalize the regula- tions and the legislation. That's pretty crucial," he adds. Judith Andrew, commission- er for employers at the Can- adian Employment Insurance Commission, says the CPA is an important stakeholder in pro- viding the federal department of Employment and Social De- velopment Canada with advice and information on a range of topics from the social insurance number register to employment insurance (EI) administration. "The CPA was the primary group contacted around import- ant implementation issues stem- ming from the recent (federal) budget that promised to reduce the two-week waiting period for EI down to one week. That has all kinds of implications that af- fect payroll," says Andrew. Advisory council The CPA's Federal Government Relations Advisory Council (FGRAC) carries out its advo- cacy work at the federal level, working with government ad- ministrators to improve regula- tions, forms and guides. There is also a Quebec advis- ory council that deals with Que- bec-specific payroll issues, es- pecially around Revenu Québec requirements. In addition, the association has a provincial advisory council and in-house manager of advocacy De Grâce to work with other provincial and territorial governments, Culhane says. The FGRAC, which has existed for more than 30 years, has played a key role in many of the association's big advocacy achievements, Culhane says, in- cluding getting the federal gov- ernment to introduce graduated penalties for late payroll remit- tances in 2008. "People say, 'What's an asso- ciation doing supporting penal- ties?' It seems counter-intuitive until you realize that the penalty for a late remittance on payroll was one of the most onerous penalties in the income tax re- gime," he says. Previously, federal income tax rules required that if a remit- tance were late, the CRA would charge a penalty of 10 per cent of the amount required to be re- mitted, in addition to interest. "There were not that many times that payments were late, but the amount of penalties at the time was $60 million a year. Those are pretty significant dol- lars," says Culhane. "When you realize that 45 per cent of payroll people work alone and another 30 per cent are in payroll departments of two or three, (there is) the possi- bility of having someone away sick or whatever the case might be" and not able to remit on time, he adds. To convince the government to change its penalty system, the FGRAC researched similar penalties in the United States, United Kingdom, Australia and New Zealand and found Can- adian penalty "was very oner- ous compared to all of the other ones," Culhane says. The council suggested a graduated penalty structure that would start at three per cent and gradually increase to 10 per cent the longer a remittance was late. In 2008, the federal government changed the penalty system to a graduated structure. Some of the association's ad- vocacy wins are for things the payroll community and employ- ers never see because the success was in stopping a change from happening, says Culhane. He describes one situation where the CPA worked to con- vince government officials not to make substantial changes to the Record of Employment. In 2005, the government was considering a change to the way it calculated EI benefits for workers in certain economically hard-hit regions of the country. Essentially, the change would base benefits on a worker's best 14 weeks of earn- ings in a year rather than their last 10 weeks of pay. "The first response of the people in government was, 'What we are going to have to do is change the Record of Employ- ment system. We are going to expand the form from 8.5 by 11 inches to 8.5 by 14 inches and we are going to add these extra data points'," Culhane recalls. The CPA met with govern- ment to discuss the issue and it was determined the program would only affect a small num- ber of employers and workers. "In 2005, there were about 1.4 million employers in Canada and they were generating eight million ROEs," he says. "We said, 'Why ask all employers to provide additional data if it's af- fecting a small percentage of the population?" In the end, Culhane says the CPA's input resulted in the gov- ernment limiting the change so it only affected about 200,000 ROEs for 6,000 employers. Culhane credits part of the as- sociation's advocacy successes to having a positive working re- lationship with government. "The people in government are not looking to cause prob- lems with employers for the most part. They want a program that gives benefits to Canadian citizens, not necessarily be caught up in a bun fight with employers or business people," he says. "When people are draft- ing the legislation, they tend to look at what is the outcome of the program. They do not think about how it is programmed, fi- nanced or administered. A role that we have elevated in govern- ment is that employers are key stakeholders," says Culhane. Current advocacy issues on the radar for the CPA include trying to replace the ROE with a system that uses existing actual payroll data to administer the EI program. "The Record of Employment is one of the most onerous and administratively burdensome forms that employers have to deal with," says Culhane. "There's no need for us to be using a Record of Employment in this day and age because ev- erything that is on your pay statement from your employer is what (the government needs) to administer employment insur- ance," he says. "This is a form that was de- veloped when we were paid in cash or by cheque rather than electronically. Yes, we've gone to electronic ROEs, but all that did was slap the old paper form onto the computer," he adds. Another issue is a legislative or policy change to allow em- ployers to issue electronic T4s to employees as a standard prac- tice. Currently, employers need employees' consent to issue their T4s electronically. He says that since CRA statis- tics show that 84 per cent of Can- adians file income tax returns electronically and do not use their paper T4s, there is no need to require employers to provide them. "Our data shows that it would save employers about $100 million a year," says Culhane. The association has been trying to persuade the govern- ment to make the change for five yearsand will keep working on it. "That's one that is definitely still on our radar," he says. "Every year, we make a little progress." Canadian HR Reporter, a Thomson Reuters business 2016 September 2016 | CPR Graduated penalties for late remittances from ADVOCACY on page 1

• Cover