The New Year has started, and OEHR wanted to bring a few 2021 payroll updates to your attention.
Canadian Pension Plan (CPP) / Employment Insurance (EI)
For those that reached their maximum annual CPP and EI deductions in 2020, you will see these deductions from your pay start again on pay 1 – January 15. We wanted to inform you of the new rates and maximum amounts.
|Year||Maximum CPP (YMPE 3) earnings||CPP contribution rate||CPP 1 annual contributions||Maximum EI earnings||EI contribution rate||EI 2 annual contributions|
- CPP- Canadian Pension Plan deduction – All employees between 18 and 70 years of age must contribute unless an employee is over age 65 and has completed a CPT30 form to stop deductions – The rate and maximum earnings have both increased in 2021.
- EI – Employment Insurance deduction – All employees – The maximum earnings has increased in 2021.
- YMPE – Yearly Maximum Pensionable Earnings – The YMPE determines the maximum amount on which to base CPP contributions and when calculating pension (DB Prime) contributions each year.
TD1, Personal Tax Credits Return, is a form used to determine the amount of tax to be deducted from an individual’s employment income. Individuals do not have to complete a new TD1 every year unless there is a change to their federal or provincial personal tax credit amounts. The basic exemption for income tax has increased from $13,229 to $13,808.
Who should complete this form? Individuals who:
- have multiple employers
- want to change amounts from previous claimed
- want to record ‘exempt’ status if total income is less than total personal tax credits
- want to record ‘NON–exempt’ status if a Non-resident employee
- want to increase the amount of tax deducted at source
If you are unsure how to complete the form, please seek financial advise.
The T4 consent status of all current and active employees who worked in the 2020 year has been changed to receive only digital T4 tax slips through My Self Service. If you require a physical hardcopy T4 slip mailed to you, you will need to withdraw your consent. Please follow the instructions on this link for withdrawal T4 consent to make the change, no later than February 5. NOTE that when you withdraw your consent, your tax slips will still be digitally available through My Self Service to print at your convenience.
T2200 – Declaration of Conditions of Employment
On December 15, 2020, the CRA posted information on a number of employment-related issues, including working from home expenses, form T2200, and employment benefits.
Home office expenses/T2200
The release of additional details on the T2200 and home office expenses will simplify the rules for you. The release included helpful tools, including a comprehensive calculator, guidance and forms, and a redesigned T777S form.
Here are the highlights:
- You will be able to claim a home office expense deduction if you worked from home in 2020 due to the COVID-19 pandemic and in particular, more than 50 per cent of the time from home for a period of at least four consecutive weeks in 2020.
- If you qualify, you can do a detailed calculation or you can use a temporary flat rate method. If you use the flat rate method, then no T2200 is needed. However, if you do a detailed calculation, you will have to obtain a T2200S (a shortened pandemic version) from Fleming.
- Under the flat rate method, you can claim $2 per day for each day worked at home up to a maximum of $400 (i.e. 200 days).
- The CRA has also announced that internet access costs are eligible, but only if the detailed calculation approach is used. It appears that the CRA expects this cost to be prorated on the same basis as utilities such as electricity and heat.
- The T2200S is a much shorter version where Fleming will only have to confirm you worked at home due to the pandemic, whether you were reimbursed for home office costs and whether those costs are reported on your T4.
Group insurance premium rates and rate changes that will be effective February 1, 2021 for all employee groups and retirees. This information will be updated under Benefits Costing Sheets closer to the renewal date of February 1.
If you have any questions, please contact firstname.lastname@example.org