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Thursday, May 27, 2010

Frequently Asked Questions - The Employment Insurance Measure for Self-Employed People (Bill C-56)

Frequently Asked Questions - The Employment Insurance Measure for Self-Employed People (Bill C-56)


Frequently Asked Questions - The Employment Insurance Measure for Self-Employed People (Bill C-56)

  1. What is the Employment Insurance (EI) Measure for Self-Employed People?
  2. What are EI special benefits?
  3. Is this measure mandatory for self-employed people?
  4. Who can participate in this new measure?
  5. How can I participate?
  6. Who is considered to be a self-employed person under this measure?
  7. If I am self-employed in Quebec, can I benefit from this new measure?
  8. Am I eligible to participate in this measure if I am self-employed and if I also work as an employee receiving insurable earnings?
  9. When can I enter into an agreement with the Commission to participate in the EI Measure for Self-Employed People?
  10. How do I enter into an agreement with the Commission to participate in the EI Measure for Self-Employed People?
  11. How long does my agreement with the Commission to participate in the EI Measure for Self-Employed People last?
  12. How do I use My Service Canada Account?
  13. Will I receive confirmation that I have entered into an agreement?
  14. Once I enter into an agreement, how long do I have to wait before I can apply for EI special benefits?
  15. What happens if I enter into an agreement to participate in the EI Measure for Self-Employed People and then later decide that it is not appropriate for me?
  16. How do I terminate my agreement?
  17. Once I terminate my agreement, when does my participation end?
  18. If I terminate my agreement, do I receive a refund of any of the EI premiums I have paid?
  19. Do I receive any confirmation when I terminate my agreement?
  20. What if, after I terminate my agreement, I need to apply for EI special benefits?
  21. Can I terminate my agreement after I have received EI special benefits?
  22. What are the conditions I have to meet to qualify for EI special benefits?
  23. When do I experience an interruption of earnings as a self-employed person?
  24. How do I apply for EI special benefits?
  25. Will I have to provide any evidence of the reason for the interruption of earnings?
  26. If I qualify for EI special benefits, how much money will I receive every week?
  27. What are my average weekly earnings?
  28. What proof do I need of my earnings?
  29. Will I have to serve a waiting period to receive EI special benefits?
  30. Can I continue working part-time while receiving special benefits?
  31. If my business continues to generate income while I am receiving EI benefits, how will this affect me?
  32. What are EI regular benefits, and can I also qualify for them?
  33. Once I register for the EI Measure for Self-Employed People, when do I start paying EI premiums?
  34. How will the Canada Revenue Agency (CRA) calculate my EI premiums?
  35. What is the 2010 EI premium rate?
  36. Will I have to pay the employer’s portion of the EI premium?

1. What is the Employment Insurance (EI) Measure for Self-Employed People?

The new EI Measure for Self-Employed People extends access to EI special benefits to self-employed people on a voluntary basis.

2. What are EI special benefits?

There are four types of EI special benefits:

  • maternity benefits, which are available to birth mothers only and cover the period surrounding the child's birth (maximum of 15 weeks);

  • parental benefits, which are available to biological or adoptive parents while they are caring for newborn or newly adopted children—these benefits may be taken by either parent or shared between them (maximum of 35 weeks);

  • sickness benefits, which may be paid to a person who is unable to work because of illness, injury, or quarantine (maximum of 15 weeks); and

  • compassionate care benefits, which may be paid to a person who has to be away from work temporarily to provide care or support to a family member who is gravely ill with a significant risk of death (maximum of 6 weeks).

For more information on EI special benefits, visit the Employment Insurance Web page.

3. Is this measure mandatory for self-employed people?

No. Participation in the EI Measure for Self-Employed People is voluntary.

4. Who can participate in this new measure?

You can participate if you are:

  • self-employed; and
  • a Canadian citizen or a permanent resident.

5. How can I participate?

To participate, you must enter into an agreement with the Canada Employment Insurance Commission (the Commission) through Service Canada.

6. Who is considered to be a self-employed person under this measure?

For the purposes of the EI Measure for Self-Employed People, a self-employed person is someone who:

  • operates his or her own business; or
  • is employed by a corporation but is not eligible to participate in the EI program as an employee because he or she controls more than 40 percent of the voting shares of that corporation.

7. If I am self-employed in Quebec, can I benefit from this new measure?

Currently, if you are a self-employed person in Quebec, you are already covered for maternity and parental benefits through the Quebec Parental Insurance Plan. If you choose to participate in this new measure, you will be eligible to apply for EI sickness and compassionate care benefits.

8. Am I eligible to participate in this measure if I am self-employed and if I also work as an employee receiving insurable earnings?

Yes. If you have registered for the measure, you may choose to apply for EI special benefits either as a self-employed person or as an employee.

Under the new EI Measure for Self-Employed People, we will take into account earnings from both self-employment and employment as an employee when we calculate your benefit amount, as long as your earnings from both sources are eligible. You will need to provide us with a Record of Employment from your employer that shows details of your insurable earnings.

9. When can I enter into an agreement with the Commission to participate in the EI Measure for Self-Employed People?

If you are a self-employed Canadian, you will be able to enter into an agreement with the Commission through Service Canada starting on January 31, 2010.

If you enter into an agreement between January 31, 2010 and April 1, 2010, you will be able to make a claim for EI special benefits as early as January 2011. This is a special start-up measure. However, if you enter into an agreement with the Commission after April 1, 2010 , you will have to wait 12 months from the date of your agreement before you will be able to make a claim for EI special benefits.

10. How do I enter into an agreement with the Commission to participate in the EI Measure for Self-Employed People?

To enter into an agreement with the Commission, you will have to register online using My Service Canada Account anywhere you can access the Internet, including at a Service Canada Centre near you.

By entering into this agreement, you will confirm your interest in participating in this measure and in paying EI premiums on your self-employment income.

11. How long does my agreement with the Commission to participate in the EI Measure for Self-Employed People last?

Once you enter into the agreement, you will have 60 days to reconsider your decision. If you choose to withdraw from the EI Measure for Self-Employed People within this 60-day period, you will not have to pay any premiums.

Once the 60-day grace period has elapsed, your participation lasts indefinitely, unless you terminate it.

However, please keep in mind that you can only terminate your agreement if you have never received EI special benefits as a self-employed person. If you have received benefits, you cannot terminate your agreement. In other words, after you receive EI special benefits, you have to continue to pay EI premiums on your self-employment income for the entire duration of your self-employment career, regardless of any change in the nature of your self-employment.

12. How do I use My Service Canada Account?

Instructions on how to use My Service Canada Account are available on the Service Canada Web site.

Please note that if you have previously used My Service Canada Account, you can register using your existing user code and password.

If you have not previously used My Service Canada Account, you can apply at any time for a personal access code on the My Service Canada Account Web page. Once you apply, it will take about 10 days to receive your personal access code in the mail.

13. Will I receive confirmation that I have entered into an agreement?

Yes. After you enter into the agreement, you will receive a confirmation number that you should keep for your records. In addition, you will later receive a letter in the mail confirming your registration.

Once the 60-day grace period has elapsed, your participation lasts indefinitely, unless you terminate it.

However, please keep in mind that you can only terminate your agreement if you have never received EI special benefits as a self-employed person. If you have received benefits, you cannot terminate your agreement. In other words, after you receive EI special benefits, you have to continue to pay EI premiums on your self-employment income for the entire duration of your self-employment career, regardless of any change in the nature of your self-employment.

14. Once I enter into an agreement, how long do I have to wait before I can apply for EI special benefits?

If you enter into an agreement on or before April 1, 2010, you will be able to apply for EI special benefits as early as January 1, 2011 .

In all other cases, you will have to wait 12 months after the day you enter into an agreement before you will be able to apply for EI special benefits. For example, if you enter into an agreement on June 15, 2010, you will be able to apply for EI special benefits as early as June 15, 2011.

15. What happens if I enter into an agreement to participate in the EI Measure for Self-Employed People and then later decide that it is not appropriate for me?

You can terminate your agreement only if you have not received EI special benefits as a self-employed person. If you have received benefits, you cannot terminate your agreement. In other words, after you receive EI special benefits, you must continue to pay EI premiums on your self-employment income for the entire duration of your self-employed career, regardless of any change in the nature of your self-employment.

Please note that, once you register, you will have 60 days to reconsider your decision. If you choose to withdraw from the EI measure for Self-Employed People within this 60-day period, you will not have to pay any premiums.

16. How do I terminate my agreement?

To terminate your agreement to participate in the EI Measure for Self-Employed People, you must notify the Commission by filing a notice of termination online using My Service Canada Account anywhere you can access the Internet, including at a Service Canada Centre near you.

17. Once I terminate my agreement, when does my participation end?

Your participation in the EI Measure for Self-Employed People will end on December 31 of the year in which you file the notice of termination.

This means that, regardless of the date you file the notice of termination, you must pay EI premiums on your self-employment income for the entire calendar year. For example, if you terminate your agreement on April 20, 2011 , you must continue to pay EI premiums until December 31, 2011 . Your access to EI special benefits will continue until the end of the year in which you terminate your agreement.

However, if you submit a claim for EI special benefits before the end of the year in which you filed your notice of termination, your notice of termination will automatically be withdrawn and you will have to continue to pay EI premiums on your self-employment income for the entire duration of your self-employed career, regardless of any change in the nature of your self-employment.

For example, if you file a notice of termination on April 20, 2011 , and you then become sick and you apply for and receive EI sickness benefits in September 2011, your agreement will not terminate on December 31, 2011 . Your participation in the measure will continue for the duration of your self-employed career.

18. If I terminate my agreement, do I receive a refund of any of the EI premiums I have paid?

If you terminate your agreement, you must still pay EI premiums on your self-employment income for the entire calendar year in which you terminate the agreement. You will not receive a refund of any EI premiums.

19. Do I receive any confirmation when I terminate my agreement?

When you terminate your agreement using My Service Canada Account, you will receive a confirmation number that you should keep for your records. Later, you will receive a letter confirming the termination.

20. What if, after I terminate my agreement, I need to apply for EI special benefits?

After you terminate your agreement, you are still eligible to apply for EI special benefits for the rest of the calendar year in which you terminate it. However, if you have not applied for benefits before that year is over, you will need to enter into a new agreement to participate in this measure, and you will have to wait 12 months before you will be eligible to apply for EI special benefits.

21. Can I terminate my agreement after I have received EI special benefits?

No. If you have received EI special benefits as a self-employed person, you cannot terminate your agreement. Your agreement will last indefinitely, and EI premiums will always be payable on your self-employment income. In other words, after you receive EI special benefits, you have to continue to pay EI premiums on your self-employment income for the entire duration of your self-employed career, regardless of any change in the nature of your self-employment.

22. What are the conditions I have to meet to qualify for EI special benefits?

You must meet the following conditions to qualify for EI special benefits:

  • your agreement to participate in the EI Measure for Self-Employed People must still be valid (that is, not terminated); and
  • you must have experienced an interruption of earnings because of:
    • the birth of a child;
    • the need to provide care to your newborn or adopted child or children;
    • illness, injury, or quarantine; or
    • the need to provide care to a gravely ill relative; and
  • you must have earned a minimum specified amount of self-employment earnings during the calendar year before the year you submit an EI claim (for claims filed in 2011, the minimum amount of 2010 income is $6,000).

23. When do I experience an interruption of earnings as a self-employed person?

As a self-employed person, you experience an interruption of earnings at the beginning of the week during which you have reduced the time you usually devote to your business by more than 40 percent as a result of illness, injury, quarantine, pregnancy, the need to care for newborn or newly adopted children, or the need to provide care or support to a family member.

For example, if you adopt a child and you reduce your usual 40-hour work week to 10 hours per week, you have reduced the time you devote to your business by 75 percent. In this case, therefore, you would experience an interruption of earnings.

24. How do I apply for EI special benefits?

To apply for EI special benefits, you must complete an EI application form on the Service Canada Web.

To do so, you can apply on the Internet from home, at any Service Canada Centre using one of the many Internet kiosks available, or at a public Internet access site in your community, such as your public library.

25. Will I have to provide any evidence of the reason for the interruption of earnings?

Yes. When you experience an interruption of earnings because of illness, injury, or quarantine or to provide care to a gravely ill relative, you will have to provide a medical certificate.

26. If I qualify for EI special benefits, how much money will I receive every week?

For those who are self-employed, the weekly benefit amount is 55 percent of the average weekly earnings from the calendar year before the year you submit an EI claim, up to a yearly maximum amount. For 2010, this maximum amount is $43 200, and the maximum weekly EI benefit amount is $457.

27. What are my average weekly earnings?

Your average weekly earnings are your total self-employment earnings for the previous calendar year, divided by 52. Total self-employment earnings are your self-employment income minus any losses, as calculated according to the Income Tax Act.

If you are a shareholder of a corporation and you control more than 40 percent of that corporation's voting shares, your average weekly earnings are what would have been your total insurable earnings from that employment if the earnings were insurable, divided by 52. Insurable earnings include most of the types of compensation that employers provide to their employees.

Your earnings from insurable employment (earnings as an employee) may also be used to calculate your average weekly earnings.

28. What proof do I need of my earnings?

If you have already filed your income tax and benefit return for the year before the year you submit an EI claim, we will obtain the amount of your self-employment earnings from the Canada Revenue Agency.

If you have not filed your income tax and benefit return for the year before the year you submit an EI claim, we will ask you to provide an estimate of your income from self-employment. We will calculate your benefit amount based on the estimate you provide, and we will make any necessary adjustments after you file your income tax and benefit return.

Please note that if your estimate is higher than your actual income, you may have to repay EI benefits.

If you also have earnings from insured employment as an employee, we will require a Record of Employment from your employer.

29. Will I have to serve a waiting period to receive EI special benefits?

Yes, there is a two-week waiting period. You will not receive any EI special benefits during this waiting period.

In some cases, such as when parental or compassionate care benefits are shared, only one waiting period needs to be served.

30. Can I continue working part-time while receiving special benefits?

Yes, you can work part-time while claiming EI special benefits, but you will have to declare any earnings you have from this part-time work on your bi-weekly EI reports (you will have to submit EI reports every two weeks during the period your EI claim is active to show you are still entitled to receive EI benefits).

  • If you are claiming sickness or maternity benefits, we will deduct any part-time earnings from your benefits on a dollar-for-dollar basis.
  • If you are claiming parental or compassionate care benefits, you can earn either a maximum of 25 percent of your weekly benefit (if your weekly benefit amount is $200 or more) or a maximum of $50 (if your weekly benefit amount is less than $200) without changing the amount of EI benefits you receive for that week. We will deduct any money you earn above that amount from your benefits on a dollar-for-dollar basis.

Keep in mind that you must always declare all your earnings.

31. If my business continues to generate income while I am receiving EI benefits, how will this affect me?

Any income your business generates for you while you are receiving EI benefits can reduce your EI benefit amount.

32. What are EI regular benefits, and can I also qualify for them?

EI regular benefits are benefits available to employees when they lose their jobs through no fault of their own and are available for and able to work, but cannot find a job.

Self-employed people cannot access EI regular benefits based on their self-employment. EI regular benefits are only available to employees who have earned insurable earnings and who meet the eligibility criteria.

33. Once I register for the EI Measure for Self-Employed People, when do I start paying EI premiums?

Beginning in the year you register to participate in the measure, your EI premiums will be calculated on your income tax and benefit return for that year. For example, if you register in 2010 to participate in this program, premiums for 2010 will be calculated on your 2010 income tax and benefit return and will be payable by April 30, 2011 .

Subsequently, if you pay your income tax by instalment, EI premiums may be included in your instalment payments .

When you register for the measure, EI premiums will be payable on your self-employment income for the entire year, regardless of the date you register. For example, whether you register in April 2010 or December 2010, you will pay EI premiums on your self-employment income for the entire year of 2010.

Please note that, once you register, you will have 60 days to reconsider your decision. If you choose to withdraw from the EI Measure for Self-Employed People within this 60-day period, you will not have to pay any premiums.

34. How will the Canada Revenue Agency (CRA) calculate my EI premiums?

The CRA will calculate your EI premiums based on your net self-employment earnings, as calculated under the Income Tax Act.

If you are a shareholder of a corporation and you control more than 40 percent of that corporation's voting shares, the CRA will calculate your EI premiums based on the amount of what would have been your insurable earnings from that employment if the earnings had been insurable. Insurable earnings include most of the types of compensation that employers provide to their employees.

35. What is the 2010 EI premium rate?

EI premiums are payable on the amount of your earnings from self-employment, up to an annual maximum amount. The annual maximum amount for 2010 is $43 200.

The 2010 EI premium rate for self-employed people is $1.73 per $100 of earnings, which is the same rate that employees pay. This means that the maximum EI premium you can pay for the 2010 calendar year is $747.36.

Since Quebec has its own parental benefits program, the Quebec Parental Insurance Plan, the 2010 EI premium rate for self-employed people in Quebec is $1.36 per $100 of earnings. In Quebec, the maximum EI premium you can pay for the 2010 calendar year is $587.52.

36. Will I have to pay the employer’s portion of the EI premium?

No. You will not have to pay the employer's portion of the EI premium.