Canadian Payroll Reporter

2 News Canadian HR Reporter, a Thomson Reuters business 2016 April 2016 | CPR Ontario delays ORPP phase-in by one year partial reduction. The budget proposes to in- crease the threshold for the maximum reduction to $19,400 and increase the factor used to calculate the credit from 3.5 per cent of net income to 3.56. The changes would take effect for the 2016 tax year. It is expected the Canada Revenue Agency (CRA) will implement them on July 1, with amounts prorated to cover the entire year. The budget also proposes to change the way premium rates are calculated for the Medical Services Plan (MSP), beginning next year. The changes include eliminating children from the premium calculation and mov- ing from three maximum pre- mium rate categories to two. Family premium rates would no longer exist. Currently, the MSP has an individual rate, a rate for a family of two and a rate for a family of at least three. The max- imjm monthly premium rate for a family of two is $136 and for a family of three or more it is $150. The budget proposes two cat- egories, one for single adults and one for couples. The maximum rate for a single adult would in- crease to $78 from $75 and the rate for an adult couple would be $156 (double the single rate). With the change, a household with one parent and two chil- dren, for example, would pay the single adult premium rate, rather than a three-person rate. The government also pro- poses to make changes to the threshold it uses for provid- ing MSP premium assistance to lower-income households. More information on the pro- posed changes is available in the budget documents at bcbudget. gov.bc.ca/2016/default.htm. New Brunswick In the budget, tabled Feb. 2, New Brunswick Finance Minis- ter Roger Melanson announced plans to eliminate the top mar- ginal personal income tax rate of 25.75 per cent and to reduce the second highest to 20.3 from 21. The proposed changes are ret- roactive to Jan. 1, but will not be implemented until July 1. The new rate would apply to taxable income over $150,000. The tax bracket would be in- dexed beginning next year. The provincial government only implemented the 21 and 25.75 per cent rates last year. Melanson says the changes are in response to the federal gov- ernment introducing a new top marginal federal income tax rate of 33 per cent on taxable income over $200,000 as of Jan. 1. The CRA says it will prorate the new rates to ensure payroll departments deduct the appro- priate amount of income tax for the entire year. The agency says it expects to release updated payroll deductions tables and formulas which incorporate the changes by the end of May. Melanson also announced the government would raise the provincial portion of the HST to 10 per cent from eight on July 1. The change will increase the overall HST rate to 15 per cent from 13. Ontario The budget, which Finance Min- ister Charles Sousa delivered on Feb. 25, did not contain any payroll-related changes. Instead, it laid out possible changes for coming months and years. The budget announced it would postpone the phasing- in of the Ontario Retirement Pension Plan (ORPP) by one year, to 2018, to give employers more time to prepare and al- low the government more time to work on possible changes to the Canada Pension Plan (CPP) that may negate the need for the ORPP. If implemented, it would run like the CPP, with mandatory contributions from employers and employees. Participation in the plan would be mandatory for ages 18 to 70 if not part of a workplace pension plan deemed comparable to the ORPP. The contribution rate for the ORPP would be up to 1.9 per cent for both employers and employees, for a combined rate of 3.8 per cent on pension- able earnings, up to an annual maximum earnings threshold of $90,000. The government re- cently confirmed the minimum earnings threshold for contribu- tions would be $3,500. The ORPP Administration Corporation, which is respon- sible for running the plan, will begin verifying which employ- ers need to sign up and enrolling them next year. ORPP contribu- tions are scheduled to begin in 2018 for large and medium-size employers without registered workplace pension plans. Large employers are those with 500 or more employees. Medium-size employers are or- ganizations with 50 to 499 em- ployees. The contribution rate would be 0.8 per cent in 2018, rising to 1.6 per cent in 2019 and to 1.9 per cent in 2020. Small employers (fewer than 50 workers) would start con- tributing to the ORPP in 2019 at a rate of 0.8 per cent. The rate would rise to 1.6 per cent in 2020 and to 1.9 per cent in 2021. Employers with registered pen- sion plans that either did not meet a comparability test or did not cover all classes of workers would begin contributing to the ORPP in 2020, with their contri- bution rate set at 1.9 per cent. Sousa says the government will table legislation this spring that will set out the requirements of the ORPP, the rules relating to plan funding, and how the gov- ernment will ensure employers and employees comply. Although the budget did not include any changes to personal income tax rates, it did note the government plans to look at ways to simplify its personal income tax calculation. The examination will include the Ontario surtax and Ontario Tax Reduction. The budget did not say when the review would oc- cur. The budget also included an- nouncements that could bring changes for payroll and HR departments in the future. An interim report on a govern- ment-commissioned review of the province's Employment Standards Act, 2000 and Labour Relations Act, 1995 is expected soon. A final report will be re- leased this summer. A committee studying issues around a gender wage gap in Ontario is expected to make its recommendations in May. The government will review its Apprenticeship Training Tax Credit to ensure it encourages employers to help apprentices gain the certifications and skills they need. Further details will be released later this year. The government will continue consulting on a new regulatory framework for target benefit multi-employer pension plans (MEPPs), which combine fea- tures of defined benefit and defined contribution pension plans. They "target" a specific pension benefit and are funded by fixed contributions. The gov- ernment released a consultation paper last year, but concerns were raised about challenges some MEPPs may face moving to a new framework and imple- menting new funding rules. The government plans to table amendments to its Pooled Registered Pension Plans Act, 2015 to further harmonize it with legislation in other jurisdic- tions. Budget documents also note the government is currently developing regulations to imple- ment pooled registered pension plans and create an appropriate test to determine comparability with the ORPP. This spring, the government proposes to launch an online consultation to find ways to make it easier for businesses to interact. Called the Red Tape Challenge, the exercise will iden- tify and eliminate duplication, lessen compliance burdens, and shorten response times. The tuition and education tax credits for students will be eliminated, beginning in the fall of 2017. Employees can claim anon-refundable tax credit for tuition and education amounts on a TD1ON, Ontario Personal Tax Credits Return, which they file with their employer. The Nunavut government also released a budget in Febru- ary, but it did not contain any payroll-related proposals. from BUDGETS on page 1 New Brunswick plans to eliminate top marginal personal income tax rate, reduce second highest.

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