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Under the Employment Insurance Act, self-employed Canadians can apply for maternity and parental Benefits.

Maternity benefits will cover the period surrounding the child’s birth (up to 15 weeks) and parental benefits will cover the period surrounding caring for the newborn (up to 35 weeks).

In order to qualify for these benefits you will need to register for the EI program at least 12 months before you make a claim for the EI special benefits. You will also have to have earned the minimum specified amount of self-employed earnings during the calendar year before you submit an EI claim (minimum amount of income in 2012 was $6,342).

For the year in which you register you will be required to make the employer portion of EI contributions. For information on EI premiums and rates please see the following link: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/ei/cnt-chrt-pf-eng.html

For example, if you register for the EI program on February 1, 2013, earned the minimum specified self-employment earnings and paid the appropriate EI premiums you could apply for EI special benefits on February 1, 2014.

If you are eligible for the EI special benefits you should receive 55% of your average weekly earnings up to the annual limit. For 2013, the maximum EI benefits you can receive are $501 per week. To receive this amount you would need to have earned insurable earnings of $47,400 during 2013.

The benefits that are received will be reduced by any insurable earnings that you earn while receiving the benefits, so if your business will continue while you are away you may not want to pay yourself a wage to avoid reducing the EI benefits that you will receive.

A very important aspect of this program is that if you make a claim for self-employed EI benefits, your participation in the program will last indefinitely. This means that you will have to pay EI premiums for the entire duration of your self-employment career.

 

 

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Rob Brown

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

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