Hiring Credit for Small Business

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Hiring Credit for Small Business

August 23, 2012

Tax Question:

Am I eligible for the Hiring Credit for Small Business (HCSB) for 2011?

Facts:

In order to be eligible for the HCSB, you must meet four criteria:

You deducted EI premiums from the remuneration paid to your employees,
You reported the income and deductions on a T4 slip and filed this information with the CRA,
Your total employer EI premiums paid for 2010 was $10,000 or less,
Your total employer EI premiums increased in 2011.

Discussion:

The CRA has introduced the Hiring Credit for Small Business (HCSB) in 2011 as a one-time credit to promote new employment. The CRA provides small businesses with a credit against the employer’s share of employment insurance (EI) premiums paid in 2011. The credit is calculated by taking the difference between the total EI premiums paid in 2011 over those paid in 2010 to a maximum of $1,000. There are no forms that need to be filed as this calculation will be done automatically by the CRA.

In order to receive the credit you must, as the employer, deduct EI premiums from your employee’s income and remit them to the CRA with your payroll source deductions. 2010 and 2011 T4 slips must have been filed to receive the credit as the CRA calculates the credit once the T4s have been filed. The credit is only eligible for small businesses which the CRA defines as an employer whose EI premiums paid for 2010 were $10,000 or less. If your total premiums paid in 2010 are more than $10,000 then you are not eligible for the credit. The credit is only available to employers whose EI premiums paid increased in 2011 compared to 2010 as this program was introduced to support new employment for 2011.

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Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.