Government puts the chill on EI rates, but premiums still hiked for some in 2014

By Special to MoneySense on January 2, 2014
Estimated reading time: 2 minutes

Canadian Taxpayers’ Federation says maximum employee EI rates will go up by $23 in 2014 to $914.

OTTAWA – It’s not just the temperatures that are freezing on this first day of 2014. The federal government says it’s freezing Employment Insurance premiums, and generally keeping taxes low. But the Canadian Taxpayers’ Federation says the EI “rate freeze” will actually mean that premiums will go up slightly for some. In its annual New Year’s Tax Changes report, the federation calculates that maximum employee EI rates will go up by $23 in 2014 to $914. It says maximum EI premiums paid by employers will also rise by $31 to $1,279. Overall, EI premium rates will remain at 2013 levels, at $1.88 per $100 of insurable earnings. The federation adds that Canada Pension Plan premiums will be hiked by $140 for workers earning at least $52,500 per year. But there will be bigger tax breaks for people who donate to charities for the first time. They will receive a credit of 40 per cent of the first $200 they donate, rather than the normal 15 per cent credit. The tax credit for donations over $200 is also rising, to 54 per cent for first time donors, rather than the previous 29 per cent. Federal Finance Minister Jim Flaherty also points out that Canadians who put money aside can save more, tax free. Adults 18 years or older will be able to contribute up to $5,500 in a Tax-Free Savings Account this year, on top of any unused contribution room they may have accumulated. The federal Registered Disability Savings Plan is also being enhanced to improve accessibility and flexibility. And the Lifetime Capital Gains Exemption will increase to $800,000 from $750,000. The CTF says that, while some taxpayers in certain provinces will benefit from tax brackets that are indexed to inflation, others in Manitoba, PEI and Nova Scotia aren’t so fortunate. Indexing tax brackets to inflation limits the amount that governments can increase taxes through higher incomes. The CTF notes that New Brunswick alone increased its income tax rates for 2014, ranging from a 3 per cent hike of the lowest bracket to a 14 per cent increase for taxable incomes between $78,609 and $127,802.