Legislative roundup: Changes in payroll laws and regulations from across Canada

Alberta minimum wage rising on Sept. 1 • Manitoba changes RST ­application date for group term life insurance • Manitoba’s minimum wage rising on Oct. 1 • Quebec introduces ­legislation to implement VRSPs • Bulletin highlights upcoming QST changes •
|Canadian Payroll Reporter|Last Updated: 08/07/2012

ALBERTA

Reminder: Alberta minimum wage rising on Sept. 1

The general minimum wage rate in Alberta is rising from $9.40 per hour to $9.75 per hour on Sept. 1, 2012. The minimum wage rate for employees who serve liquor as part of their regular job will remain at $9.05 per hour.

When the government implemented the minimum wage for liquor servers last year, it announced the rate would stay at $9.05 until the general minimum wage reaches $10.05 an hour. Once that happens, both minimum wage rates will increase, but the general rate will be $1 higher. Also effective Sept. 1, 2012, the following minimum wage rates change:

•the minimum wage for many salespersons increases from $376 per week to $389

•the minimum wage for domestic employees who live in the employer's residence rises from $1,791 per month to $1,854.

If an employer provides board and/or lodging to an employee, the amount by which an employer may reduce the employee's wages below minimum wage increases on Sept. 1, 2012, from $3.09 per meal to $3.20 for each meal the employee consumes and from $4.08 per day for lodging to $4.22. Minimum wage changes occur Sept. 1 each year and use an average of changes to Alberta's annual average weekly earnings and changes to the province's Consumer Price Index.

MANITOBA

Manitoba changes RST ­application date for group term life insurance

Manitoba has changed the date on which the province’s seven per cent retail sales tax applies to group term life insurance contracts from July 1, 2012 to July 15, 2012.

In the April 17, 2012 provincial budget, the government announced  the tax would apply to group term life insurance at the beginning of July. However, in the legislation to enact the change, the implementation date is July 15, 2012.

Employers are required to include the tax when calculating the taxable benefit for employer-paid premiums for group term life insurance for employees who are residents of the province.

Reminder: Manitoba’s minimum wage rising

On Oct. 1, 2012, the minimum wage rate in Manitoba is rising from $10 per hour to $10.25.

QUEBEC

Quebec introduces ­legislation to implement VRSPs

Quebec has introduced legislation to implement voluntary retirement savings plans (VRSPs) as of Jan. 1, 2013. VRSPs are a type of pooled registered pension plan for individuals who do not have employer-sponsored pension plans.

Bill 80, An Act respecting voluntary retirement savings plans, was introduced in the National Assembly on June 12, 2012. At press time, the bill had not yet become law.

The bill would make it mandatory for employers with an establishment in Quebec who employ at least five eligible employees to offer a VRSP if they do not already take payroll deductions for employee contributions to a registered retirement savings plan or registered pension plan. Eligible employees would be employees with a minimum of one year of uninterrupted service with the employer. The term “uninterrupted service” would apply in the same way it does under provincial labour standards for determining vacation entitlement. The plans would be optional for other employers.

The employers for whom a plan is mandatory would be required to select a VRSP, automatically enroll all eligible employees, take payroll deductions for the employee contributions and send the deductions to a VRSP administrator who runs the plan (such as a financial institution). Employers would have to send in the contributions by the last day of the month that follows the day the employer collects them. Employers would not be obligated to contribute to the plans.

At least 30 days before signing up for a VRSP, an employer would have to notify employees of its plan to do so, as well as inform them of a number of specified items, including: eligible employees would be automatically registered but could opt out, employees who are not eligible but who wish to join the plan should inform the employer, employees may set their own contribution rate, and so on.

No more than 30 days after signing the VRSP contract with the plan administrator, the employer would be required to notify employees that:

•they can renounce their membership within 60 days of receiving this notice

•they can terminate their membership at any time

•there is a default contribution rate for employees who do not choose a contribution rate and what it is (the default rate will be set out in regulations under the act)

•there is a default investment option and that employees may change their investment choice.

Source deductions for VRSP contributions would begin 60 days after the employer sends the notice to the employees.
Employers who have five or more eligible employees as of Dec. 31, 2012, would have two years to set up a VRSP.  After that time, employers who have at least five eligible employees on December 31 of a year must set up a plan in the following year.

The Commission des normes du travail is proposed to be the body that will ensure that employers are meeting their obligations.

Bulletin highlights upcoming QST changes

Quebec has released details on how it plans to change the Quebec Sales Tax (QST) system to better harmonize it with the GST. Last fall, the Quebec and federal governments agreed to further harmonize the taxes as of Jan. 1, 2013.
In a recently released Information Bulletin, entitled Changes to Quebec’s Tax System pursuant to the Undertakings to Harmonize It with the Federal Tax System Applicable in 2013 (#2012-4, May 31, 2012), the province’s Finance Ministry provided details on how it proposes to harmonize the taxes.

The bulletin noted the government plans to raise the QST rate from 9.5 per cent to 9.975 per cent as of Jan. 1, 2013, to coincide with a change to the way in which the tax is calculated.

Beginning next year, the QST is proposed to apply to the price of a good or service before including the GST. Currently, the QST is calculated on the price of the good or service plus the GST, resulting in an effective QST rate of 9.975 per cent. The rate change would be made to ensure the provincial government continues to collect the same amount of tax with the new calculation method as it does currently. The bulletin also explained how the rate change will be implemented on movable property and service and on immovables.

The bulletin also noted the government plans to partially eliminate the compensation tax paid by financial institutions as of Jan. 1, 2013. The change is a related to a proposal to make financial services exempt from the QST, as they are for the GST. Currently, financial services are zero-rated under the QST (meaning the QST is charged at a rate of zero per cent). Once exempt, financial services businesses would no longer be able to claim input tax refunds (ITRs). With the elimination of ITRs, the government believes it no longer needs to charge the full compensation tax.

As a result, on Jan. 1, 2013, the government proposes to eliminate the portion of the compensation tax that relates to paid-up capital and to reduce the rates that apply for other parts of the compensation tax base, including the tax on wages, to only the temporary additional rates that were implemented two years ago for the period March 31, 2010 to March 31, 2014. The portion of the compensation tax that applies to amounts paid as wages for taxation years that begin before April 1, 2014 would be reduced as follows:

•from 3.9 per cent to 1.9 per cent for banks, loan corporations, trusts or corporations trading in securities;

•from 3.8 per cent to 1.3 per cent for savings and credit unions; and

•from 1.5 per cent to 0.5 per cent for others (excluding insurance corporations and professional orders that have created an insurance fund).

The bulletin also provides details on registration and reporting period requirements. It is available on the Finance Ministry website at www.finances.gouv.qc.ca/documents/bulletins/en/BULEN_2012-4-a-b.pdf.