Provincial & Federal Budget Changes for Canadian Payroll in 2017

April 18, 2017 Marlo Hertling

Here's our annual post that summarizes which budget changes will and won’t impact Canadian Payroll. Subscribe to stay current, if you haven't already.

At the time of writing the following Canadian jurisdictions have released their 2017 budgets:

Federal

On March 22, 2017, the Federal Budget was presented by Finance Minister, Bill Morneau. The Budget has the following impacts on Payroll.

All T4’s Can Now Be Delivered Electronically
Electronic T4s (e-T4s) will now be accepted as the standard delivery method to employees.

Canada Savings Bond Plan Eliminated
The government announced the elimination of Canada Savings Bonds in 2017.

Proposed Changes to Employment Insurance (EI) Program

  • The EI rate is projected to remain at $1.68 per $100 of insurable earnings for 2018.
  • A new caregiving benefit of up to 15 weeks for those providing care to an adult family member who requires significant support in order to recover from a critical illness or injury.
  • Changes to parental benefits enabling parents the choice of up to 18 months of parental leave at a lower benefit rate of 33 per cent of average weekly earnings or the current 12 months at the existing benefit rate of 55 per cent.
  • Women may also choose to claim maternity benefits up to 12 weeks before their due date (up from the previous 8 weeks).

Proposed Changes to Taxable Benefits and Allowances

  • Effective 2018, the $25,000 home relocation loan deduction will be eliminated.
  • Effective 2019, the non-accountable allowance paid to municipal officers will be eliminated.

For more information on the Budget, please visit the Canada Budget 2017 website.

Alberta

On March 16, 2017, Finance Minister, Joe Ceci tabled the 2017-2018 Budget in the Alberta Legislative Assembly. The Budget contained no impacts on Payroll.

Personal Income Tax Rates Unchanged
The budget does not include any changes to personal income tax rates.

For more information on the Budget, visit the Alberta Government website.

British Columbia

On February 21, 2017, the British Columbia Provincial Budget was presented by Finance Minister, Michael de Jong. The Budget has the following impacts on Payroll:

Personal Income Tax Rates Unchanged
The budget does not include any changes to personal income tax rates.

Medical Services Plan Changes
The British Columbia Medical Services Plan Premium Calculation Method changed effective January 1, 2017.

  • There are no premiums for children under the age of 19
  • MSP premium rates will be determined by the number of adults on an MSP account
    (the MSP account holder and, if applicable, a spouse)
Adjusted Net Income One Adult Two Adults in a Family
$0 - $24,000 $0.00 $0.00
$24,001 - $26,000 $11.00 $22.00
$26,001 - $28,000 $23.00 $46.00
$28,001 - $30,000 $35.00 $70.00
$30,001 - $34,000 $46.00 $92.00
$34,001 - $38,000 $56.00 $112.00
$38,001 - $42,000 $65.00 $130.00
Over $42,000 $75.00 $150.00

Source: http://www2.gov.bc.ca/gov/content/health/health-drug-coverage/msp/bc-residents/premiums#2017

Changes to BC Medical Services Plan Calculation Method for 2018
Effective January 1, 2018, medical services plan (MSP) premiums will be reduced by 50 percent for households with annual net incomes up to $120,000. In order to qualify for the reduction, households will need to register with the government in order to verify income information to determine eligibility.

Individuals and families currently receiving premium assistance (with incomes up to $42,000) will automatically be registered for the 50 percent reduction.

Examples of the premium reductions are illustrated below:

  • A single adult with net income between $42,001 and $120,000 will save $450 per year or $37.50 per month
  • A couple with family net income between $45,001 and $120,000 will save $900 per year or $75 per month
  • A senior couple with family net income between $51,001 and $120,000 will save $900 per year  or $75 per month
  • A single parent with two children with net income between $48,001 and $120,000 will save $450 per year or $37.50 a month
  • A couple with two children with family net income between $51,001 and $120,000 will save $900 per year or $75 per month

Families or individuals whose income exceeds $120,000 will continue to pay the current rates of $75 per month for one adult and $150 per month for 2 adults with dependents.

The Budget also stipulated that the premium reductions are a part of the government's initiative to phase out premiums altogether.

For more information on the Budget, visit the Ministry of Finance website.

Manitoba

On April 11, 2017, Finance Minister, Cameron Friesen, delivered the 2017-2018 budget. The Budget has the following impact on Payroll:

Personal Income Tax Rates Unchanged
The budget does not include any changes to personal income tax rates.

For more information on the Budget, please visit the Manitoba Government website.

New Brunswick

On February 7, 2017, Finance Minister, Cathy Rogers tabled the 2017-2018 Budget in the New Brunswick Legislative Assembly. The Budget contained no impacts on Payroll.

Personal Income Tax Rates Unchanged
The budget does not include any changes to personal income tax rates.

For more information on the Budget, visit the Ministry of Finance website.

Northwest Territories

On February 1, 2017, Finance Minister, Robert C. McLeod tabled the 2018 Budget in the Northwest Territories Legislative Assembly. The Budget contained no impacts on Payroll.

Personal Income Tax Rates Unchanged
The budget does not include any changes to personal income tax rates.

For more information on the Budget, visit the Ministry of Finance website.

Nunavut

On February 22, 2017, Finance Minister, Keith Peterson tabled the 2018 Budget in the Nunavut Legislative Assembly. The Budget contained no impacts on Payroll.

Personal Income Tax Rates Unchanged
The budget does not include any changes to personal income tax rates.

For more information on the Budget, visit the Ministry of Finance website.

Ontario

On April 26, 2017, Finance Minister, Charles Sousa tabled the 2017-2018 Budget in the Ontario Legislative Assembly. The Budget contained no impacts on Payroll.

Personal Income Tax Rates Unchanged

The budget does not include any changes to personal income tax rates.

For more information on the Budget, visit the Ontario Government website

Prince Edward Island

On April 7, 2017, Finance Minister, Allen Roach, delivered the 2017-2018 budget. The Budget has the following impact on Payroll:

Personal Income Tax Rates
The Basic Personal Income Tax exemption will increase by 2%.

For more information on the Budget, please visit the PEI Government website.

Québec

On March 28, 2017, Finance Minister, Carlos Leitao, delivered the 2017-2018 budget. The Budget has the following impact on Payroll:

Personal Income Tax Rates
Budget 2017 provides for an increase in the basic personal amount, starting in the 2017 taxation year.

For the 2017 taxation year, this tax reduction will be applied when individuals file their income tax returns. For the 2018 taxation year, it will be factored into the income tax to be deducted at source.

Taking into account the general tax reduction, the amount used to calculate the basic tax credit will be raised from $11,635 to $14,890 for the 2017 taxation year.

Note: It is expected that Revenu Québec (RQ) will publish a new 2018 calculation method in fall 2017.

Refund of Personal Health Contribution Paid in 2016
Budget 2017 confirmed the elimination of the personal health tax contribution. In addition, Budget 2017 announced a retroactive refund of the 2016 contribution for eligible employees. Employers are not responsible for processing these refunds. Eligible employees, who paid the health contribution through deductions at source throughout 2016, will receive their refund when RQ processes their tax returns for the 2016 taxation year.

As per Budget 2017 refunds will be processed as follows:

The refunds of health contributions will be determined and paid by RQ when notices of assessment are issued.

  • 2016 tax returns that were processed before March 29, 2017, will be adjusted by RQ, and taxpayers will receive their refunds by direct deposit or cheque no later than June 30, 2017.
  • Any 2016 tax returns processed after March 28, 2017, will be adjusted to take into account the health contribution refund for those qualifying for it.
  • The adjustments made by RQ will be shown in the notices of assessment. 

For more information on the Budget, please visit the Québec Government website.

Saskatchewan

On March 22, 2017, Finance Minister, Kevin Doherty, delivered the 2017-2018 budget. The Budget has the following impacts on Payroll:

Personal Income Tax Rates
Starting July 1, 2017, the Saskatchewan government proposes to reduce the personal tax rates as follows:

The government also indicated that tax brackets will continue to be indexed on an annual basis. 

 

2016

2017

2018

2019

2020

First bracket

11.0%

10.75%

10.5%

10.25%

10.0%

Second bracket

13.0%

12.75%

12.5%

12.25%

12.0%

Third bracket

15.0%

14.75%

14.5%

14.25%

14.0%

Provincial Sales Tax Rate Increase
The Provincial Sales Tax (PST) rate will increase from 5 to 6%, effective March 23, 2017. 

Group Insurance Premiums Subject to PST Effective July 1, 2017
Effective July 1, 2017, the 6% PST will apply to all insurance premiums as defined in The Saskatchewan Insurance Act.

The PST includes insurance premiums payment due dates on or after July 1, 2017, regardless of when the policy was issued. This includes all life, accident and health insurance.

For more information on the Budget, please visit the Saskatchewan Government website.

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About the Author

Marlo Hertling

Marlo Hertling has worked with leading HCM organizations and has been helping Canadian companies implement HCM solutions for more than 15 years. Currently she is the Director of Marketing & Communications for Avanti Software Inc and serves as Avanti's HCM subject matter expert.

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