Canadian Payroll Reporter

News Published 12 times a year by Thomson Reuters Canada Ltd. Subscription rate: $179 per year Customer Service Tel: (416) 609-3800 (Toronto) (800) 387-5164 (outside Toronto) Fax: (416) 298-5106 E-mail: carswell.customerrelations @thomsonreuters.com Website: www.carswell.com One Corporate Plaza 2075 Kennedy Road Toronto, Ontario, Canada M1T 3V4 Director, Carswell Media Karen Lorimer Publisher/Editor-in-Chief Todd Humber Editor Sheila Brawn sbrawn@rogers.com Editor/Supervisor Sarah Dobson Assistant Editor Mallory Hendry Marketing Manager Robert Symes rob.symes@thomsonreuters.com (416) 649-9551 Circulation Co-ordinator Keith Fulford keith.fulford@thomsonreuters.com (416) 649-9585 Payroll Reporter Can R Can R adian adian a www.payroll-reporter.com ©2016 Thomson Reuters Canada Ltd ISBN/ISSN: 978-0-7798-2810-4 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, photocopying, recording or otherwise without the written permission of the publisher (Carswell, a Thomson Reuters business). Return Mail Registration # 1522825 | Return Postage Guaranteed Paid News Revenue Toronto Canadian Payroll Reporter is part of the Canadian HR Reporter group of publications: • Canadian HR Reporter — www.hrreporter.com • Canadian Occupational Safety magazine — www.cos-mag.com • Canadian Payroll Reporter — www.payroll-reporter.com • Canadian Employment Law Today — www.employmentlawtoday.com • Canadian Labour Reporter — www.labour-reporter.com See carswell.com for information June 2016 | CPR Corporation for permission. Calculating contributions: Contributions would be calcu- lated in a similar way to CPP contributions, with employers and employees equally paying into the plan. An annual basic exemption of $3,500 would ap- ply to contributions. Employees and employers would contribute up to an annual maximum pen- sionable earnings amount. The maximum would be adjusted each year for changes in the prov- ince's average wage. For 2018, the maximum would be set as though it were $90,000 in 2017. The full employer and em- ployee contribution rate would be 1.9 per cent, although it would be lower while the gov- ernment phases in the ORPP. In 2018, large (at least 500 employ- ees) and medium (50-499 em- ployees) employers without reg- istered workplace pension plans would begin paying contribu- tions. The rate for both employ- ers and employees would be 0.8 per cent, rising to 1.6 per cent in 2019 and to 1.9 per cent in 2020. Small employers without registered workplace pension plans would begin paying into the ORPP in 2019, with the rate set at 0.8 per cent. It would rise to 1.6 per cent in 2020 and 1.9 per cent in 2021. Employers with registered plans that do not meet the ORPP comparability test would have to begin paying con- tributions in 2020, with the rate set at 1.9 per cent. The government has not yet said which types of earnings would be included when calculat- ing ORPP contributions. The bill proposes pensionable earnings would be covered in regulations. As a result, it is not yet known if the government will harmonize ORPP pensionable earnings with those under the CPP. Employees on leave: The bill would not allow employees to contribute to the plan while they are on a leave of absence allowed under the Employment Standards Act, 2000, unless they elected to do so. If employees on leave opted not to pay contri- butions, employers would not be required to pay their share. However, if an employee chose to continue ORPP contributions while on leave, the employer would have to pay contributions. Successor employers: If one employer immediately suc- ceeded another employer due to the formation or dissolution of a corporation or the acquisition of all or part of the other employer's business, the successor employ- er could take into account the amount of ORPP contributions the original employer deducted, remitted or contributed. Both the original employer and the successor employer would be liable to pay all ORPP amounts the original employer owed. Employer responsibilities: Bill 186 would require employ- ers to calculate and deduct em- ployees' ORPP contributions and remit them to the ORPP Admin- istration Corporation, along with the employer's contribution. The Ontario government says it is in talks with the federal government about having the Canada Revenue Agency (CRA) help administer the plan, but it is not yet known if the CRA will collect ORPP remittances and, if so, whether they will be har- monized with the remittance of federal source deductions. The legislation would also re- quire employers to keep records. Details on the type of informa- tion and for how long will be in- cluded in regulations. Pensions: The ORPP pension benefit would aim to replace 15 per cent of an individual's pre- retirement earnings, up to about $90,000. The size of the pension would depend on the length of contribution and salary. Individuals who pay into the ORPP would be eligible to re- ceive pension benefits when they turn 65; however, they could opt to take a reduced pension as ear- ly as age 60 or delay it until up to age 70 for an enhanced pension. Penalties: The bill proposes to allow the ORPP Administra- tion Corporation to impose ad- ministrative penalties of up to $10,000 if an employer fails to remit contributions on time or provide documents or informa- tion within 30 days of being re- quested to do so. The bill would also authorize fines for employers found guilty of offences under the act, such as failing to remit contributions or providing false information. Penalties of up to $100,000 would apply for a first offence. For subsequent offences, the penalty would be up to $200,000. Opposition MPPs took issue with the bill. Progressive Con- servative (PC) members said the government was exaggerating the need for a new pension plan. They said it would hurt the prov- ince's economy by increasing costs for businesses and workers and leading to job losses. "While larger businesses may be able to absorb these added costs, smaller businesses will be forced to either reduce the size of their workforce or the hours those employees are able to work," said PC MPP Julia Munro. New Democratic Party (NDP) members criticized the num- ber of exemptions allowed in the Act, saying they will result in millions of Ontario workers being excluded from the ORPP. NDP MPP Jennifer French said the ORPP should require univer- sal coverage, like the CPP. She added that the govern- ment should ensure that ORPP legislation mirrors that of the CPP as much as possible. "Any departure of the ORPP from the CPP will make it difficult to inte- grate the ORPP into a future and potential CPP enhancement," French told the legislature. While the government has no plans to remove exemptions for employers with comparable plans, Hunter told the legislature that she still hopes to broaden ORPP coverage to include some workers currently excluded. "If they have a comparable plan, they are exempt, because it's deemed that they have ad- equate coverage. If they do not have a comparable workplace pension plan, then they will be part of the ORPP. For the self- employed, for federally regulat- ed employees, we will continue to press the federal government to ensure that we can give them an option to be part of this plan as well," Hunter said. from ORPP on page 3 Aims to replace 15% of pre-retirement earnings

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