Canadian employers expected to save $100 million following removal of employee payslips

Changes to the country’s Employment Insurance programme are among other measures proposed in the 2017 Federal Budget.

Canadian employers are expected to save more than $100 million each year in administration costs following the government’s decision to enable the electronic distribution of T4 payroll slips to employees.

The measures, announced in Finance Minister Bill Morneau’s 2017 Federal Budget, build on legislation first introduced in 2010, which require all employers filing more than 50 T4 slips to deliver them to the Canada Revenue Agency in electronic rather than paper form.

The latest move follows a survey by the Canadian Payroll Association (CPA) among 5,600 employees last year, which revealed that 95% either prefer to receive their payslips electronically or do not mind either way. The research also found that a third of employers already take this approach anyway.

Patrick Culhane, the CPA’s president, said: “E-T4s are more secure and this change will save employers over $100 million annually, considering the cost of administering a paper T4 is $5 per slip and over 20 million slips are never used.”

Canada’s 1.5 million employers pay out more than $928 billion in wages and taxable benefits each year, he added. Some $313 billion, which represents 60% of federal government revenues, goes on payroll remittances, including personal income tax, the Canada Pension Plan and Employment Insurance contributions to federal and provincial governments. Another $177 billion is spent on health and retirement benefits.

Other measures announced in the Budget that are likely to have an impact on payroll include:

1. Changes to the Employment Insurance (EI) programme
– The introduction of a new benefit of up to 15 weeks for workers 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 to chose whether they should take up to 18 months of leave at a lower benefit rate of 33% of average weekly earnings, or stay with the current rate of 55% for 12 months
– Maternity benefits can now be claimed for up to 12 weeks before the mother’s due date, up on the previous eight weeks.

2. Proposed $12.1 million in funding for the government’s Employment and Social Development Canada (ESDC) department to develop more modern approaches to EI service delivery
– ESDC will work with Service Canada, which provides citizens with a single point of access to government services and benefits, and the CPA to explore how real-time payroll data could be used to boost the quality of service delivery for EI claimants. The move is estimated as likely to save $150 million in direct costs for employers and is expected to cut overpayments and bad debts.

3. Proposed changes to taxable benefits and allowances
– The $25,000 home relocation loan deduction will be eliminated as of 2018
– The non-accountable allowance to municipal officers will disappear as of 2019.