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© The Canadian Payroll Association – Payroll Fundamentals 2 7-1 Vs 11.0

Workers’ Compensation Remittances and Reconciliations

Learning Objectives: Upon completion of this chapter, you should be able to:

1. calculate assessments for workers’ compensation (WC) and for la Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST)

2. apply remittance schedules

3. reconcile remittances

4. reconcile estimated and actual annual assessable earnings

Communication Objective: Upon completion of this chapter, you should be able to:

1. explain to Accounts Payable why workers’ compensation payments are not the same amount throughout the year

2. communicate the year-end schedule for all workers’ compensation remittance and reporting deadlines to internal stakeholders

Chapter

7

Chapter 7 Workers’ Compensation Remittances and Reconciliations

© The Canadian Payroll Association – Payroll Fundamentals 2 7-2

Chapter Contents Introduction ........................................................................................................................ 7-3

Workers’ Compensation Assessment Calculation ......................................................... 7-3 Calculating Assessable Earnings ................................................................................... 7-3 Calculating Total Assessable Earnings and Annual Assessment .................................. 7-8 Content Review ............................................................................................................ 7-12 Review Questions ........................................................................................................ 7-13

Workers’ Compensation Remittance Process .................................................................. 7-16 Remitter Types ............................................................................................................. 7-16 Remittance Schedules .................................................................................................. 7-16 Payment Methods ......................................................................................................... 7-27 Reconciliation of the Workers’ Compensation Remittances ....................................... 7-29 Content Review ............................................................................................................ 7-32 Review Questions ........................................................................................................ 7-33

Annual Reporting ............................................................................................................. 7-35 Payroll Reporting ......................................................................................................... 7-35 Content Review ............................................................................................................ 7-44 Review Questions ........................................................................................................ 7-45

Chapter Review Questions and Answers ......................................................................... 7-47



Introduction Workers’ compensation is a legislated provincial/territorial insurance program that provides benefits to workers who must be absent from work due to work-related injuries or illnesses. It removes the liability from employers for work-related illness and injury. Workers’ compensation plans, which are funded solely by employers, are administered by a workers’ compensation board or commission within each jurisdiction. For example, in Ontario, workers’ compensation is administered by the Workplace Safety and Insurance Board (WSIB); in Alberta, by the Workers’ Compensation Board of Alberta (WCB); and in Québec by la Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST). The term workers’ compensation board (WCB) will be used generically in this chapter. Employers must register with the workers’ compensation board or commission in each jurisdiction where they have employees; the registration must take place within a certain time period after hiring their first full or part-time employees. In most Canadian provinces or territories, workers' compensation legislation requires that employers file an annual statement of payroll. There are some exceptions, based on the jurisdiction and/or the employer remitter type. This annual statement is referred to by various names depending on the jurisdiction, for example, Employer Payroll Statement, Statement of Wages, Employer Annual Report or Employer’s Payroll Return.

Workers’ Compensation Assessment Calculation As discussed in Payroll Compliance Legislation, most private-sector employers pay a mandatory premium to cover the organization against work-related injuries or illnesses. Each province and territory has a workers’ compensation board that determines the assessability of earnings and the premium rates.

Calculating Assessable Earnings Before calculating the total assessable earnings, the employer must first calculate the total maximum assessable earnings and the excess earnings (that is, the amount by which the earnings exceed the annual maximum assessable earnings) for each employee. To calculate total assessable earnings for the year for each employee, three criteria must be considered:

the employee-employer status

earnings that have been legislated as assessable

the total dollar amount of assessable earnings up to a maximum amount for each employee, referred to as maximum assessable earnings



Employee-Employer Status Employers in most industries are responsible for insuring their full and part-time employees, as well as their casual and seasonal workers and students, under workers’ compensation. A payer of service may also be responsible for ensuring that any independent operator or business hired under a contract for service is registered with workers’ compensation and paying regular premiums. To be exempt from assessment, the independent operator or business must provide a clearance certificate issued by the workers’ compensation agency. The clearance certificate states that the contractor or business is registered and paying their own premiums. If they are not registered or not making payments, the payer could be liable for the premiums owing in connection with the work or service performed on the payer’s behalf. Example:

Randi River Building Supplies has hired A1 Junk Removal, an independent contractor, to help with the annual clean-up of broken or excess inventory. A1 Junk Removal must provide a certificate of clearance to prove that they are registered with the WCB. Note: The rate used by workers’ compensation to cover independent operators may not be the same as the rate used to cover employees.

Types of Earnings It is important that the payroll system is set up to total all earnings that are legislated as assessable so that the organization’s remittances are calculated on the correct base of assessable earnings. Although workers’ compensation is legislated provincially, and therefore could be different in each province, there are many similarities in assessable earnings categories. The earnings listed below are assessable in all jurisdictions.

regular salary and wages

work-related bonuses

discretionary bonuses

call-in pay

shift premiums

standby pay

overtime pay

commissions

cash gifts and awards



gratuities

retroactive pay

statutory holiday pay

vacation pay

The following table shows assessable earnings and taxable benefits by jurisdiction. This is a non-exhaustive list that was created for general reference only. Workers’ Compensation Boards should be contacted for additional information and/or clarification. Exhibit 7-1 – Assessable Earnings by Jurisdiction

TYPE OF EARNING INCLUDED AS ASSESSABLE

ALL AB* BC* MB* NB* NL* NT*

Regular wages and salaries X X X X X X X

Bonuses (discretionary and work-related)

X X X X X X X

Call-in pay, shift premiums, standby pay, overtime pay

X X X X X X X

Commissions X X X X X X X

Directors’ fees (if employee) X X(1) X X X

Employer-paid short-term and long-term disability

X X X X X(2) X

Gifts/awards (in kind) if taxable X X X X X

Gifts/awards (in cash) X X X X X X X Tips and gratuities (controlled by the employer)

X X X X X X X

Wages in lieu of notice (legislated) X X X X X

Retroactive payments X X X X X X X

Retiring Allowances

Sick pay X X X X X X(2) X

Statutory holiday pay X X X X X X X

Taxable cash allowances (for example, car, clothing, housing)

X X X X X

Taxable benefits X (3) X (3) X X

Vacation pay X X X X X X X

*AB – Alberta; BC – British Columbia; MB – Manitoba; NB – New Brunswick; NL – Newfoundland and Labrador ; NT – Northwest Territories

(1) Only if coverage applied for, and approved (2) Sick pay up to 13 continuous weeks is assessable (3) Only employer contributions to a Registered Retirement Savings Plan (RRSP) that are not locked

in until retirement, and stock options are assessable



TYPE OF EARNING INCLUDED AS ASSESSABLE

NU* NS* ON* PEI* QC* SK* YT*

Regular wages and salaries X X X X X X X

Bonuses (discretionary and work-related)

X X X X X X X

Call-in pay, shift premiums, standby pay, overtime pay

X X X X X X X

Commissions X X X X X (4) X X

Directors’ fees (if employee) X X X X X

Employer-paid short-term and long-term disability

X X X X (5) X X

Gifts/awards (in kind) if taxable X X X X X X X

Gifts/awards (in cash) X X X X X X X

Tips and gratuities (controlled by the employer)

X X X X X X X

Wages in lieu of notice (legislated)

X X X X X X

Retroactive payments X X X X X X X

Retiring Allowances

Sick pay X X X X X(5) X X

Statutory holiday pay X X X X X X X

Taxable cash allowances (for example, car, clothing, housing)

X X X X X X X

Taxable benefits X X X X X X X

Vacation pay X X X X X X X

*NU –Nunavut; NS – Nova Scotia; ON – Ontario; PEI – Prince Edward Island; QC – Québec; SK – Saskatchewan; YT – Yukon

(4) If deemed to be an employee, not assessable if individual is self-employed (5) For the first 105 days of total sick pay, short term disability and long term disability

Note: This assessable earnings chart was presented in Payroll Compliance Legislation and is illustrated here for the purpose of calculating remittances.



Maximum Assessable Earnings

In the event of a work-related accident or illness, workers’ compensation pays workers a benefit equal to a percentage of their net or gross earnings, depending on the jurisdiction, up to an annual maximum amount. The annual maximum amount, which will vary from one jurisdiction to another and usually changes each year, is the amount on which the workers’ compensation premiums are calculated. The following chart lists the maximum assessable earnings for each jurisdiction for 2017: Exhibit 7-2

JURISDICTION MAXIMUM ASSESSABLE

EARNINGS 2017 Alberta $98,700 British Columbia $81,900 Manitoba $127,000 New Brunswick $62,700 Newfoundland and Labrador $63,420 Northwest Territories $90,600 Nova Scotia $59,300 Nunavut $90,600 Ontario $88,500 Prince Edward Island $52,800 Québec $72,500 Saskatchewan $76,086 Yukon $85,601

Example:

Wayne Panko works for B.C. Aviation as an accountant. In 2017, Wayne earned a total of $100,900.00 in wages and taxable benefits. In B.C., the 2017 maximum assessable earnings per employee are $81,900.00. For the annual statement of payroll, Wayne’s employer would calculate his excess earnings as follows: 2017 earnings $100,900.00 Less maximum assessable earnings - 81,900.00 Excess earnings $19,000.00 Wayne’s employer would only pay premiums based on the maximum assessable earnings of $81,900.00, even though Wayne earned over that amount.



In all jurisdictions (except within the construction industry in Québec), employers must calculate each employee’s maximum assessable earnings on an annual basis. Even if an employee only worked for part of the year, the employer is still required to pay premiums based on the year’s maximum assessable earnings. Example:

Barbara Tyler was hired by Outdoor Outfitters Inc. in Halifax, Nova Scotia on February 5 of the current year. On September 6, Barbara quit work to start her own company. Her earnings record showed she had earned a total of $60,500.00 in commissions and taxable benefits. In Nova Scotia, the maximum assessable earnings for 2017 are $59,300.00. Since the company is not allowed to prorate the maximum assessable earnings of $59,300.00 over the seven months Barbara worked, it must pay premiums on her total earnings up to $59,300.00, even though Barbara did not work the full year.

Calculating Total Assessable Earnings and Annual Assessment Once the assessable earnings have been calculated for each employee, the employer can then calculate the total assessable earnings that will be reported on the workers’ compensation annual statement of payroll. Workers’ compensation premiums are calculated on the total assessable earnings at a rate determined by the jurisdiction, the industry and the experience rating. The total annual assessment is calculated by multiplying the total assessable earnings by the premium rate set by the workers compensation board. Note: Even though workers’ compensation remittances are not due each month in every jurisdiction, employers may require the payroll department to accrue this liability monthly throughout the year.



Example:

Chandler Graphics, located in New Brunswick, has seven employees. Each employee’s gross earnings for the current year are outlined in the following table:

EMPLOYEE GROSS EARNINGS

FOR THE CURRENT YEAR

Lloyd Frey $24,982.10 Daniel Légère $63,897.32 Lisa Jardine $68,559.24 Muriel Coutts $32,783.30 Stephen Wong $57,772.10 Matilde Ambrose $24,250.65 Fred Clements $80,300.00 Total Gross Earnings $352,544.71

The annual maximum assessable earnings per employee in New Brunswick are $62,700.00 For each employee who earned more than this amount, the excess earnings are calculated as follows:

EMPLOYEE GROSS

EARNINGS

ANNUAL MAXIMUM ASSESSABLE

EARNINGS

EXCESS EARNINGS

Lloyd Frey $24,982.10 $62,700.00 $0.00 Daniel Légère $63,897.32 $62,700.00 $1,197.32 Lisa Jardine $68,559.24 $62,700.00 $5,859.24 Muriel Coutts $32,783.30 $62,700.00 $0.00 Stephen Wong $57,772.10 $62,700.00 $0.00 Matilde Ambrose $24,250.65 $62,700.00 $0.00 Fred Clements $80,300.00 $62,700.00 $17,600.00 TOTALS $352,544.71 $24,656.56

To determine the total assessable earnings, subtract the excess earnings from the total gross earnings as follows: Total gross earnings $352,544.71 Less: total excess earnings - 24,656.56 Total assessable earnings $327,888.15 The resulting amount, $327,888.15, is entered in the total assessable earnings section of the annual statement of payroll; the amount calculated as total excess earnings, $24,656.56 is entered as total excess payroll; the amount calculated as total gross earnings for the year $352,544.71, is entered as gross payroll.



Chandler Graphics’ premium rate was set at $1.21/$100. To determine the total annual assessment, the total assessable earnings are multiplied by the premium rate. $327,888.15 x 1.21 = $3,967.45 100 The total annual assessment is $3,967.45. This amount will be reconciled on the annual Employers Payroll Report – Form 100 with any premium payments that have been made during the year. Calculating the Annual Maximum Assessable Earnings in Québec (Construction Industry Only) For the Québec construction industry, the assessable earnings, as well as the excess earnings, are calculated on a weekly basis. The weekly assessable earnings are calculated by dividing the annual maximum insurable earnings by 52.14 weeks. The 52.14 weeks is determined by dividing 365 days in a year by 7 days in a week. On the statement of payroll (called the Statement of Wages in Québec), the excess earnings are calculated by week of employment, regardless of the pay frequency in which the employee is paid, using the maximum assessable earnings per employee. This is the only situation in which the annual maximum assessable earnings may be prorated during the year. This calculation method must be applied to each employee for each week of employment during the reporting year, including the weeks that an employee is on vacation.



Example:

Fern Dubois, who works for Metropolitan Construction in Québec City, is paid on a semi-monthly basis. The annual maximum assessable earnings for Québec for the current year are $72,500.00. The weekly maximum assessable earnings are calculated as follows: Weekly maximum assessable earnings = $72,500.00 52.14

= $1,390.49 For the month of September, Fern’s earnings on a weekly basis are as follows: Week 1: $1,210.25 Week 2: $1,172.30 Week 3: $1,515.65 Week 4: $1,537.05 Week 5: $1,292.43 Based on the maximum weekly assessable earnings for the current year of $1,390.49, the excess earnings in weeks 3 and 4 are calculated as follows: Excess earnings week 3 = $1,515.65 - 1,390.49 $ 125.16 Excess earnings week 4 = $1,537.05 - 1,390.49 $ 146.56



Content Review Workers’ compensation plans, which are funded solely by employers, are

administered by a workers’ compensation board or commission within each jurisdiction.

To calculate total assessable earnings for the year for each employee, three criteria must be considered:

o the employee-employer status

o earnings that have been legislated as assessable

o the total dollar amount of assessable earnings up to a maximum amount for each employee, referred to as maximum assessable earnings

An employer may be responsible for covering not only the employees on their payroll, but also any contract workers who do not have their own workers’ compensation coverage.

The assessability of earnings, allowances and benefits is legislated by each jurisdiction.

The annual maximum assessable earnings per employee or worker are determined by each jurisdiction.

Total assessable earnings are calculated by subtracting excess earnings from the total gross earnings.

Premiums are calculated on the total assessable earnings at a rate determined by the jurisdiction, the industry and the experience rating.

In Québec, for the construction industry only, the assessable earnings, as well as the excess earnings, are calculated on a weekly basis.



Review Questions 1. Why might an organization be required to provide workers’ compensation coverage for a

contract worker? 2. True or False. Bonus payments are considered assessable for workers’ compensation in

all jurisdictions.

3. Wages in lieu of notice are considered assessable in the following jurisdictions:

a. Manitoba, Nunavut, Prince Edward Island, Yukon b. British Columbia, Québec, Saskatchewan c. Alberta, Northwest Territories, Ontario d. a and c

4. Complete the following chart:


EARNINGS CURRENT YEAR

New Brunswick

British Columbia

Manitoba

Québec

Nova Scotia

Northwest Territories

Ontario



5. a. Calculate the total assessable earnings for the following Ontario payroll:

EMPLOYEE GROSS

EARNINGS

Nadira Singh $98,432.12

Jamie Barnacoat $20,559.24

Chris Carter $100,078.10

Alfred Ho $42,300.00

b. Calculate the total annual assessment using the premium rate of $0.96/$100.



6. Calculate the total weekly assessable earnings for the following Québec construction industry payroll:

EMPLOYEE GROSS

EARNINGS

WEEK 1

GROSS EARNINGS

WEEK 2

GROSS EARNINGS

WEEK 3

GROSS EARNINGS

WEEK 4

Véronique Bolduc $896.00 $943.00 $1,396.26 $1,232.70

Audrey Verreault $1,801.64 $1,974.64 $1,801.64 $1,927.64

Claire Roy $759.00 $845.00 $827.00 $793.00



Workers’ Compensation Remittance Process The remittance due dates for an employer’s workers’ compensation premiums will vary by jurisdiction and are often dependent on the size of the total assessable payroll. Note: Only in British Columbia and Newfoundland and Labrador does the industry type (for example, the fishing and wood harvesting industries) affect the remittance frequency as well.

Remitter Types Remitter types include weekly, bi-weekly, semi-monthly, monthly, quarterly, semi-annual and annual, depending on the remittance schedule in each jurisdiction as discussed below. Note: Other remittance arrangements can be discussed with the workers’ compensation board.

Remittance Schedules The total annual remittance is generally due within 30 days of the date of the assessment notice. Most jurisdictions allow for the current year’s premiums to be paid in installments for any employer whose total annual premiums are above a minimum amount. In jurisdictions that provide an installment plan, the employer must meet all of the following criteria to be eligible to participate:

the employer’s total remittance for the year exceeds a specified minimum amount

the employer’s account is not in arrears

the annual statement of payroll has been received by the due date The installment due dates vary by jurisdiction. Employers are notified of the dates either when they are invoiced or prior to the start of the year. To avoid late remittance penalties, it is critical that an employer be aware of the due dates and pay premiums on time. Alberta The Workers’ Compensation Board ― Alberta offers employers between one and six installments, depending on their total annual premium as illustrated in the chart below:



Exhibit 7-3

PREMIUM NUMBER OF

INSTALLMENTS

$0.00 – $499.99 1

$500.00 – $1,499.99 2

$1,500.00 – $4,999.99 4

$5,000.00 and over 6

A 12-month installment plan may also be granted for employers with an annual premium greater than $1,200.00 who elect to make their remittances using a pre-authorized debit. There is a minimum $200.00 per year premium for every employer to cover the annual costs to administer a WCB account and contribute toward covering employer claim costs. This premium is reviewed annually to determine if any change is required. British Columbia WorkSafeBC classifies employers with a total annual remittance of under $1,500.00 as annual remitters with the remittance deadline between March 1 and March 15 of the following year. Employers with a total annual remittance of $1,500.00 or more are classified as quarterly remitters with payment deadlines by the 20th of the month following the end of each quarter. Exhibit 7-4

PREMIUM COVERAGE PERIOD DUE DATE

Under $1,500.00 Calendar year Between March 1 and March 15 of the following year

$1,500.00 and over

January 1 – March 31 April 1 – June 30 July 1 – September 30 October 1 – December 31

April 20 July 20 October 20 January 20

Manitoba In Manitoba, The Workers Compensation Act allows the Workers Compensation Board to collect employer assessments in periodic payments. Manitoba employers report payroll and pay assessments using the Annual Billing System, the Quarterly Reporting Program or FlexPay.



Annual Billing System

Employers under the Annual Billing System submit a payroll report with estimates of assessable payroll for the current year and actual payroll for the preceding year. This earnings report is required by the last day in February each year. The WCB allows employers whose accounts are in good standing to pay assessments according to the following schedule:

First installment: 40% of total amount due on the last day of the billing month

Second installment: 30% of total amount due on or before August 31

Third installment: 30% of total amount due on or before October 31 Quarterly Reporting Program

Participation in the Quarterly Reporting Program requires approval from the WCB. To qualify for this program, an employer must have:

an annual assessable payroll at or above a threshold specified by the WCB and,

an account in good standing with the WCB. Employers under the Quarterly Reporting Program complete four workers’ earnings reports and pay assessments based on actual assessable workers’ earnings after the quarter. Exhibit 7-5

COVERAGE PERIOD PREMIUM DUE DATE Annual Billing System

Calendar Year 40% of total amount due on the last day of the billing month 30% of total amount due on or before August 31 30% of total amount due on or before October 31

Quarterly Reporting Program

January 1 to March 31 April 1 to June 30 July 1 to September 30 October 1 to December 31

April 20July 20 October 20 January 20

For industries required to have WCB coverage under The Workers Compensation Act, the minimum yearly premium is $100.00. For voluntary industries, the minimum yearly premium is $150.00. FlexPay

The FlexPay system has been in place since 2014 and offers more payment methods, flexibility in remittance schedules and online reporting capability. Payment options and payment methods are based on three annual premium amount thresholds:



up to $500.00

between $500.00 and $5,000.00

greater than $5,000.00 The payment options for each threshold range from one annual payment to 10 equal payments and payment methods include cash, cheque, debit, credit cards or pre-authorized debit and credit cards. Employers who use the FlexPay system report their actual payrolls for the previous year and estimate their payrolls for the current year in February. They may revise their estimated payroll amount at any time during the year. New Brunswick WorkSafeNB allows employers to remit their workers’ compensation premiums either annually or monthly.

Annual Premium Payment

After filing the Employer Payroll Report – Form 100 at the beginning of the new calendar year and providing the estimated payroll for the current year, employers receive an Assessment Notice with the premiums due on the estimated payroll amount. Annual remitters have two payment options: Option A

The total amount noted on the assessment notice(s) plus any carry-forward balance may be paid in full within 30 days of the billing date of the assessment notice, or March 31st, whichever date is later. Interest will not be levied on the total assessment notice(s) if the full payment is received by this date. Note: A carry-forward balance represents any amounts owing for the previous year’s estimated payroll reconciled against the actual payroll. Option B

The total amount noted on the assessment notice(s) plus any carry-forward balance may be paid in two installments:

100% of the previous year’s adjustments and carry-forward balance plus 50% of the current year’s assessment is due within 30 days of the billing date or March 31st, whichever date is later

the remaining 50% of the current year’s assessment balance (plus any accumulated interest) is due no later than August 31st of the current year



The full balance will become due and payable if the first payment required under option B is not made as scheduled. In such cases, WorkSafeNB will immediately take appropriate action to collect the full outstanding balance. Note: Option B is not available to an employer who has ceased operations or has not renewed an application for voluntary coverage. In such cases, full payment is due upon receipt of the assessment notice. Monthly Assessments on Actual Payroll (MAAP) Program Payments

WorkSafeNB has developed an alternative reporting method, called the Monthly Assessments on Actual Payroll (MAAP) program. The MAAP program allows employers to use either fax or a password-protected on-line tool on the WorkSafeNB web site to report actual monthly payroll amounts, and then automatically pay a monthly premium amount using a pre-authorized electronic funds transfer. The MAAP program works as follows:

the employer electronically files a statement of their actual payroll by the 15th of the following month

WorkSafeNB returns a statement of account to the employer

the employer has three business days to review and verify the statement

the assessed amount is deducted from the bank account of the employer’s choice

Newfoundland and Labrador Employers who pay employees in Newfoundland and Labrador have their workers’ compensation premiums assessed on their estimated payroll for the current year by WorkplaceNL, using an Employer Payroll Statement – Form A6. Employers are charged an underestimating penalty if their actual payroll is greater than 125% of the amount estimated. They can file adjustments to their estimated payroll throughout the year. Employers may be permitted to pay their current year assessment on an installment basis within the current year. To be eligible to pay by installments, employers must have:

submitted payroll statements with the required information for all year

an annual assessment of $50 or more

provided a reasonable estimate of payroll for the current year

paid all prior year adjustments in full within 30 days of the invoice date Employers meeting these requirements may make equal installments from April 1st to December 31st by pre-authorized debit paid either:



quarterly – 4 equal payments in April, June, September and December

monthly – every month on the same day

semi-monthly – twice monthly on the same days each month, with the first payment between April 1st and April 15th

bi-weekly – every two weeks on the same day, with the first payment between April 1st and April 14th

weekly – every week on the same day, with the first payment between April 1st and April 7th

No interest is charged if employers comply with the agreed-upon payment schedule. Note: Employers in the fish purchasing or wood harvesting industries remit their workers’ compensation premiums quarterly by the 15th of the month following the end of each quarter. Premiums are not calculated on payroll but on the actual fish purchased or wood harvested. Northwest Territories and Nunavut Employers who pay employees in the Northwest Territories and/or Nunavut have their workers’ compensation premiums assessed on their estimated payroll for the current year as reported on the Employer Payroll Statement (EPS) which is sent by the Workers’ Safety and Compensation Commission (WSCC) of the Northwest Territories and Nunavut to employers in December. Separate payroll records for the Northwest Territories and Nunavut are maintained by employers based on their workers’ usual place of residence. If the workers do not live in the Northwest Territories or Nunavut, employers report their payroll to the territory where the workers are employed. The total annual premiums, plus any difference between the estimated payroll and the actual payroll from the past year, are due within 30 days of the employer’s receipt of the workers’ compensation board’s invoice that follows the completed EPS, unless the employer is approved to pay by installments. The minimum annual assessment is $50.00. To be eligible to pay by installments, employers must have:

submitted a recent employer payroll statement

paid their previous year’s assessment and any penalties

a satisfactory payment history, and

an assessment of $1,000.00 or more



If an employer fails to meet the installment schedule or provide the WSCC with information and/or reports when required, the WSCC may revoke the installment plan and demand payment of the balance immediately. Nova Scotia Through a partnership between the Workers' Compensation Board (WCB) of Nova Scotia and the Canada Revenue Agency (CRA), employers with Nova Scotia operations are able to pay their WCB premiums based on actual payroll rather than on an annual estimate. The role of the CRA is to accept remittances on the WCB’s behalf. Under the Assessment Payment Plan (APP), employers use the same payment dates and frequencies, and the same payment methods that are used to make their remittances for statutory payroll deductions to the CRA. This method allows employers to pay WCB premiums according to their CRA remittance frequency, instead of in one lump sum at the beginning of each year. This also eliminates the difficulties associated with estimating payroll in advance, when some businesses (for example, seasonal) have not yet begun operating for the year. The APP allows employers to report payroll information and make WCB payments at the same time as their federal payroll remittances, as the WCB requires employers to calculate their payments based on the same reporting period as the CRA. Although both organizations require their own remittance vouchers, the format of the voucher is the same for each type of remittance and one payment is submitted for the total amount of both remittances. Employers who are registered with the WCB of Nova Scotia are required to have a Payroll Account Number for their WCB account. Using the Payroll Account Number allows the CRA to more easily accept and process payments and then forward the funds and transaction information to the WCB of Nova Scotia. If the total assessable payroll is not reported by the due date for each reporting period, the WCB will charge a penalty based on 10% of the premium owing; repeated late filers may be charged a 20% penalty. If the payroll amount for a reporting period is increased after the due date for the reporting period, a 10% penalty will be applied on the difference in premium owing, and retroactive interest will be applied. Interest is charged on outstanding amounts, using the same interest rates used by the CRA for unpaid balances. Ontario Employers must report and remit premiums to the Workplace Safety and Insurance Board (WSIB) based on a three-tier reporting structure consisting of monthly, quarterly, or annual remittances, depending on the amount of their insurable earnings. Premium frequencies cannot be changed during a premium year to be effective that same year.



Employers on a monthly or quarterly reporting frequency report and remit premiums based on actual insurable earnings. Annual employers report and remit premiums based on estimated insurable earnings. During the year, employers who remit annually and who have reason to believe that their actual payroll will be significantly different from their estimated insurable payroll should contact the Workplace Safety and Insurance Board as this might affect their remittance frequency for the following year. The minimum premium charged to employers is $100 per account, per calendar year regardless of the number of rate groups or classification units under which the employer is classified. The thresholds for the three-tier reporting structures are as follows: Exhibit 7-6

REPORTING AND PAYMENT

FREQUENCY (NEXT YEAR)

INSURABLE EARNINGS

(CURRENT YEAR) DUE DATE

Monthly $300,000 or more Last day of the month following the reporting period

Quarterly $20,000 to $299,999.99 Last day of the month following the reporting period

Annual

Less than $20,000 April 30 of the following year

Prince Edward Island Employers submit an Employer Registration Form annually to report their actual payroll for the previous year and their estimated payroll for the current year. The Workers’ Compensation Board of Prince Edward Island uses the information reported to bill a provisional assessment to the employer on the Statement of Account. If the assessment is $1,000.00 or more, employers qualify to have their assessment divided into two equal billings; the first half is due 30 days from the date on the Statement of Account and the second half is deferred to August of the current year. During the year, employers must advise the WCB in writing of any change in their estimated payroll. If their estimate is too low, a revised estimate must be submitted and the WCB will then adjust the assessment. Failure to submit a revised payroll estimate may result in penalties.



Monthly Assessment Payment Option

The Board offers a monthly remittance option for the filing and payment of workers’ compensation assessments; employers’ participation in this program is voluntary. Using this option, employers are required to file, on a monthly basis, the actual amount of their previous month's payroll, together with the required assessment payment. Special remittance forms are mailed to employers each month for this purpose. Québec Since January 1, 2011, employers with a Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST/CSST) account remit their premiums to Revenu Québec at the same time as they remit their source deductions and employer contributions, using the same remittance slip. The premiums are based on actual, not estimated, wages paid. Although the official remittance frequencies are the same as those used by Revenu Québec, the CNESST will allow employers who remit their source deductions and employer contributions twice-monthly or weekly to remit their CNESST remittances once a month. This monthly remittance must be made by the due date for the last remittance for that particular month. Penalties and interest will only be applied if the employer makes the CNESST remittance after the due date for the last remittance for that particular month. Exhibit 7-7

REMITTANCE FREQUENCY

ACTUAL PAYROLL CHEQUE/DIRECT DEPOSIT DATE

CNESST REMITTANCE IS DUE NO LATER THAN….

Annually

Pay dates during reference year The 15th of the month following the last month of the year in which remuneration was paid (January 15 in most cases)

Quarterly January 1 – March 31 April 1 – June 30 July 1 – September 30 October 1 – December 31

April 15 July 15 October 15 January 15 of the following year

Monthly 1st of the month to the end of the month

The 15th of the following month

Twice-monthly 1st to 15th of the month 16th to end of the month

The 10th of the following month

Weekly 1st to 7th of the month 8th to 14th of the month 15th to 21st of the month 22nd to the end of month

The third working day after the last day of the month



In October, the CNESST advises employers of their installment rate for the following year on a Classification Decision form. If there is a change to the organization’s classification during the year, a new Classification Decision will be sent. For employers with only one classification, the installment rate is the premium rate. For employers with more than one classification unit, the CNESST provides a periodic installment rate that is calculated by using a weighted average of the premium rates for each classification unit. The periodic installment rate is used to calculate the premiums owing on the total wages paid during the remittance period. A Statement of Wages form is sent to employers at the beginning of every year. All wages paid in the previous year are reported on this form, which is due no later than March 15. The CNESST will verify if the total of the installments paid for the previous year are sufficient based on the actual wages reported on the Statement of Wages. The CNESST will not impose penalties for any under-remittances provided the employer uses the prescribed installment rate(s) assigned by the Commission throughout the year. If under-remittances are a result of any other reason, penalties of up to 15% of the difference between the premiums that were paid and the premiums that should have been paid will be imposed. Saskatchewan Employers with workers’ compensation accounts in Saskatchewan are supplied with an Employer Payroll Statement (EPS) form in January to be completed and submitted to the Workers’ Compensation Board (WCB) of Saskatchewan by February 28 of the current year. On the EPS employers must report their actual gross payroll for the previous year and an estimate of their gross payroll for the current year. Based on these estimates, premiums are then assessed by the WCB; at the end of the year, premium adjustments are made when the actual payroll is reported. If at any time an employer finds that their estimate is too low or too high, they must contact the WCB and provide an updated estimate to avoid any potential penalty. Annual employer premiums are usually payable in two installments, the first on April 1 and the balance on September 1 of the same year. A $100.00 minimum annual assessment is applied to all employer accounts to cover the administration costs of providing insurance. Yukon Employers annually file an Employer’s Payroll Return (EPR) to report their actual assessable payroll from the previous year as well as an estimate of their assessable payroll for the current year. Based on these estimates, premiums are then assessed by the Yukon Workers’ Compensation Health and Safety Board (YWCHSB). At the end of the year, premium adjustments are made when the actual assessable payroll is reported.



Assessments payable for the current year are due March 30, based on the information provided on the employer’s EPR and are paid in a lump sum or by installment, at pre-determined or scheduled due dates approved by the YWCHSB. The minimum annual assessment is $150.00. For current year assessments, there are two methods of payment:

a) Payment on Estimated Payroll (POEP)

Under this method, employers pay assessments based on their estimate of expected payroll for the current year. Payments may be made by installments, at the employer’s request, if the assessments due are greater than $250.00 and the YWCHSB approves the installment plan.

b) Payment on Actual Payroll (POAP)

In certain circumstances, instead of paying assessments on their estimates of payroll for the current year, qualifying employers can report and pay assessments in monthly installments on their actual monthly payroll.

In order to qualify for POAP, the employer must have:

an annual payroll greater than $500,000.00

two years of operation in Yukon or be in good standing with another Canadian workers’ compensation board or commission

Employers who are accepted for POAP must:

complete a monthly remittance report and submit it by the 15th of the following month

be in good standing with the YWCHSB at all times

complete and submit the annual EPR

Failure to meet these requirements may result in removal from the POAP.

Employers may update their payroll estimate for the current year without penalty up to September 30 of the current year. After September 30, employers may update their payroll information with valid business reason (for example an unexpected contract, increase or decrease in work) and with either full payment or other payment arrangements acceptable to the YWCHSB, at the time of the update, without penalty. After September 30, employers may update their payroll without valid business reason; however, full payment is due at the time of the update or the update will not be accepted and the employer will incur a penalty.



Payment Methods With most workers’ compensation boards, payments of premiums can be made by mail, preauthorized debit, online, in person at any workers’ compensation office, at authorized financial institutions and by telephone using a credit card. Workers’ compensation premium payments in Nova Scotia are remitted to the Canada Revenue Agency at the same time as payroll remittances. For this reason, payroll service providers can remit the payments on behalf of their Nova Scotia clients. Similarly, as the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST) payments are remitted to Revenu Québec at the same time as payroll remittances, payments can be made by payroll service providers. Penalties for Late Remittances Each jurisdiction levies penalties on employers who do not remit their assessment payments by the due date. The following table lists the late payment penalties for the various jurisdictions. Exhibit 7-8 JURISDICTION LATE PAYMENT PENALTIES Alberta Payments which are 30 days or more overdue are subject to interest

calculated at a rate established by the Board. British Columbia The following penalty structure is in place:

Penalties are charged on a sliding scale, based on the amount of an employer's quarterly or annual assessment. The minimum penalty is $50

Outstanding balances are subject to continuing penalties

Failure to make payment, arrange a payment plan, or follow through with a payment plan will result in collection action including legal action

Manitoba If premiums are not received by the due date, a late payment penalty is charged. An additional late payment penalty will be charged on any continuing outstanding balance on the fifth working day of each following month. The penalty is based on the Royal Bank of Canada prime lending rate plus 5% compounded monthly.

New Brunswick The regular rate of interest is charged on overdue accounts based on the Bank of Canada rate plus 3%. The sum of these amounts is not to exceed 18%.

WorkSafeNB charges MAAP employers a late payment penalty of 1% of their overdue balance instead of an interest charge.



JURISDICTION LATE PAYMENT PENALTIES Newfoundland and Labrador

The employer will be charged an interest penalty on the outstanding balance each month. The interest rate is set annually at a rate of prime plus 5%.

Northwest Territories & Nunavut

If employers fail to submit payroll statements by the deadline, the WSCC may apply a penalty equal to 15% of the employer’s assessment for the previous year.

The minimum late reporting penalty is $25.00 and the maximum is $10,000.00.

Nova Scotia The penalty for late reporting for any of the remittance periods is 10% of the premium owing. Repeated late fines may be assessed at 20%.

Interest is charged on outstanding amounts calculated using the same rates as the Canada Revenue Agency for unpaid balances.

Ontario When an employer fails to comply with its reporting and premium payment obligations, the WSIB:

levies administrative non-compliance interest and charges, and

may lay charges under the Provincial Offences Act for specific offences

The WSIB applies debit interest at the Bank of Canada rate plus 6%. This interest rate is adjusted quarterly and is shown on the monthly statement of account in annual and monthly amounts.

The WSIB calculates an estimated premium on any missing reports based on the employer’s previous reporting history and charges 5% of the estimated premium as a non-compliance charge onto the employer’s account.

Prince Edward Island

If an assessment is not paid within the time mentioned in the notice of assessment, the defaulting employer shall pay an additional amount equal to 1.5% of the unpaid amount and, if default in payment continues for longer than one month after the expiration of the time stated in the notice of assessment, an additional 1.5% of the unpaid amount may be assessed.

The penalty for refusal or neglect to make or transmit any payroll statement or to pay an assessment is $100.00 for each week that the payment or report is not made.

Penalties for non-payment may include service charges on the unpaid balance, collection fees and the cost of any claims while the account is in default.



JURISDICTION LATE PAYMENT PENALTIES Québec If an employer fails to make a periodic installment payment, makes a

late payment or makes an insufficient payment during the year, they may have to pay one of the following penalties:

7% of the amount not paid within the prescribed time limit, if that amount is paid within seven (7) days following the due date

11% of the amount not paid within the prescribed time limit, if that amount is paid as of the 8th day to the 14th day inclusively, following the due date

15% of the amount not paid within the prescribed time limit in all other cases

Saskatchewan Where any assessment is not paid at the time when it becomes due, the employer will be charged interest at the Bank of Canada rate as of October 31 of the previous year, plus 6% as a penalty on the unpaid amount(s). This will be applied in addition to any previous penalty applied to the amount in default.

The employer may also be liable for workers’ injury expenses for the time the premium remains unpaid.

Yukon If payments are not received by their pre-approved due dates, the YWCHSB will charge a penalty and subsequent monthly interest and may also require immediate full payment of assessments. If an employer repeatedly fails to provide payments by their due dates, the YWCHSB may also require a security deposit.

If a worker of an employer who has neglected to pay assessments owing or provide a payroll return to the YWCHSB, is injured, the worker is covered. However, the employer may be directly charged up to the full cost of the claim in addition to any other assessments levied.

The board may also order the employer to cease employing workers until the default is remedied to the satisfaction of the board.

Reconciliation of the Workers’ Compensation Remittances A regular reconciliation of workers’ compensation remittances should be done, even between legislated remittance frequencies, to ensure that the appropriate earnings are being included in assessments. Some areas that may require particular attention include:

verifying that each type of payment or benefit is being correctly classified for assessability using the appropriate jurisdiction’s assessable earnings definitions

updating manual and cancelled cheques each pay period for any payroll corrections, bonus runs, and taxable benefits (for example, gifts and awards, automobile taxable benefits)



monitoring provincial and/or territorial annual maximum assessable earnings for the current year

ensuring that any inter-jurisdictional transfers of employees are reported accurately and on time

including contract workers who may not have a clearance certificate

excluding uncovered executives (for example sole proprietors, directors, or their family members who reside with them) from the periodic assessment statement

The use of spreadsheets and/or report-writing software can help ensure that accurate payroll information is being reported and filed on the assessment statements to each workers’ compensation board. Regular reconciliation of assessable earnings will minimize the effort involved in the annual reconciliation that is required by workers’ compensation boards at year-end. Workers’ Compensation Audits A workers’ compensation audit is a review of an organization’s financial reporting system, verifying the earnings reported to the workers’ compensation agency. Through this review process, the audit will:

evaluate the current reporting system and provide recommendations for improvements

identify potential exposures within the organization to uninsured risk such as:

o directors/owners without personal coverage

o subcontractors without workers’ compensation accounts

o volunteers

provide workers’ compensation information specific to the organization’s needs

link the employer to the appropriate resource support for all workers’ compensation matters

If selected for an audit, an employer must ensure that all financial records are readily accessible for the auditor's review. These can include the following:

financial statements

payroll records

year-end slips and related summaries

tax returns

general ledgers

accounts payable ledgers



invoices

cancelled cheques and cheque stubs The results of the audit will be detailed in a confidential summary report that is mailed to the employer. The audit will explain the results and provide recommendations where necessary. In addition to financial reporting, a workers’ compensation audit will also look at the health and safety measures in the organization.



Content Review The due dates of an employer’s remittance of workers’ compensation premiums will

vary by jurisdiction, and are often dependent on the size of the total assessable payroll.

Remitter types for workers’ compensation premiums include weekly, bi-weekly, semi-monthly, monthly, quarterly, semi-annually and annually.

In jurisdictions that provide an installment plan, the employer must meet all of the following criteria to be eligible to participate:

o the employer’s total remittance for the year exceeds a specified minimum amount

o the employer’s account is not in arrears

o the annual statement of payroll has been received by the due date

Each jurisdiction levies penalties on employers who do not remit their assessment payments by the due date.

A regular reconciliation of workers’ compensation remittances should be done to ensure that the appropriate earnings are being included in assessments for the relevant jurisdiction.

A workers’ compensation audit is a review of an employer’s financial reporting system, verifying the earnings reported to the workers’ compensation board. It may also include a review of health and safety measures.



Review Questions 7. In which two jurisdictions does the industry type affect an organization’s workers’

compensation premium remittance frequency? 8. List the criteria that must be met before an employer may be considered eligible to make

workers’ compensation payments in multiple installments. 9. A quarterly remitter in British Columbia must send in workers’ compensation payments

no later than:

a. the 20th of the month following the end of each quarter b. the 15th of the month following the end of each quarter c. the 20th of the following month d. the 15th of the following month

10. True or False. Employers with a Commission des normes, de l’équité, de la santé et de la

sécurité du travail account remit their premiums to the Canada Revenue Agency according to their source deduction remittance frequency.

11. In which jurisdiction may an employer be liable for workers’ injury expenses during the

time the employer’s premium is unpaid?



12. In which jurisdiction may the WCB order an employer with unpaid premiums to cease employing workers until the default is remedied to the satisfaction of the board?

13. List three areas that may require particular attention when it comes to reconciling

workers’ compensation remittances.

14. Which documents might a workers’ compensation auditor want to review during an employer audit?

15. You are the Payroll Manager for Inter-provincial Marketing Inc. You have employees in

Ontario and Saskatchewan. The annual assessable earnings in each province are as follows:

Ontario $2,500,000.00 Saskatchewan $ 800,000.00

When are the premium remittances due during the year?



Annual Reporting Organizations that employ workers in more than one jurisdiction will complete an annual statement for each jurisdiction where the employees work. The statement must report the employees’ total earnings in the specific province or territory (generally the same figure that is listed on the T4 Summary/RL-1 for the individual jurisdiction), their total assessable earnings, and their total excess earnings. In some jurisdictions, the employer must provide an estimate of their employees’ earnings for the coming year.

Payroll Reporting Depending on the jurisdiction and/or remittance frequency, workers’ compensation premiums will be based on either an actual or estimated assessable payroll. At year-end the workers’ compensation board will reconcile the employer’s assessment to the actual assessable payroll. Early in the new calendar year, employers are required to file their annual statement of payroll which reports the following:

gross actual payroll for the previous year (in general, this is the total amount reported in box 14 of the T4s, or Box A of the RL-1s for Québec)

actual assessable payroll for the previous year (the gross payroll less the earnings paid in excess of the annual maximum assessable earnings)

an estimate of the total assessable payroll for the current year (not required in Québec)

The due date for filing the annual payroll statement varies from one jurisdiction to another, with the majority being due by the end of February of the following year. The workers’ compensation board uses the statement to:

compare the employer’s estimated payroll for the previous year to its actual payroll in order to determine whether any adjustments to the employer’s account are necessary

determine the amount the employer will be required to pay in workers’ compensation premiums (the employer’s assessment)



Annual Returns and Due Dates Exhibit 7-9

JURISDICTION BOARD NAME NAME OF RETURN

DUE DATE

Alberta Workers’ Compensation Board − Alberta

Employer Annual Return

Last day of February

British Columbia WorkSafeBC Employer Payroll and Contract Labour Report

As stated on report

Manitoba Workers Compensation Board of Manitoba

Annual Payroll Form Last day of February

New Brunswick WorkSafeNB Employer’s Payroll Report – Form 100


Newfoundland and Labrador

WorkplaceNL Employer’s Payroll Statement


Northwest Territories/ Nunavut

Workers’ Safety and Compensation Commission of the Northwest Territories and Nunavut

Employer’s Payroll Statement


Nova Scotia Workers’ Compensation Board of Nova Scotia

Employer Year-End Update

No due date *

Annual Subcontractor Report

March 31

Ontario Workplace Safety and Insurance Board (WSIB)

Reconciliation Form March 31

Prince Edward Island

Workers Compensation Board of Prince Edward Island

Employer Registration Form


Québec Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST)

Déclaration des salaires (Statement of Wages)

March 15

Saskatchewan Saskatchewan Workers’ Compensation Board

Employer Payroll Statement


Yukon Yukon Workers’ Compensation Health and Safety Board

Employer Payroll Return


* Does not need to be completed if there are no changes



Completing the Annual Statement of Payroll The following table provides the steps to complete the annual statement of payroll:

Exhibit 7-10

STEP ACTION

1 Enter the required information: employer name and address, telephone number, type of industry, address where the payroll records are kept and, in some cases, the names of individuals who are requesting personal coverage (directors, executive officers). Where the organization has an account with the workers’ compensation body, this information will be pre-printed on the form.

2 Where required, enter the total gross wages and salaries paid for the previous year (not all jurisdictions require this information.).

3 Calculate and enter the total assessable earnings for the previous year – the total gross payroll less wages paid in excess of the annual maximum.

4 Calculate and enter the estimated assessable earnings for the upcoming year (not required in all jurisdictions or for all remitter types).

5 Depending on the jurisdiction, additional information may be required, for example, the names of contractors or sub-contractors who performed services for the employer, the names of executive officers, or information regarding the date the business was sold or discontinued operations.

Reconciling Estimated and Actual Amounts on the Statement of Payroll One of the purposes of the annual statement of payroll is to reconcile the amount reported as an estimate of assessable earnings for the previous year to the actual for the year, and, where required, to calculate any outstanding premiums owing for that year. The following table lists the steps to reconciling these amounts: Exhibit 7-11

STEP ACTION

1 Calculate the actual amount of premiums paid in the previous year (which were based on an estimate of that year’s assessable earnings) as follows:

Estimated assessable payroll for previous year x The premium rate for the previous year = Premiums pre-paid for the previous year

2 Calculate the premiums to be paid on the actual assessable payroll for the previous year as follows:

Actual assessable payroll for previous year x The premium rate for the previous year = Total premiums due for the previous year



STEP ACTION

3 Calculate the balance outstanding as follows:

Total premiums due for the previous year Premiums pre-paid for the previous year = Balance outstanding/overpaid for the previous year* *The outstanding balance is normally billed by the applicable workers’ compensation board.

Example:

The estimated total annual assessable payroll for the previous year was $750,000.00. The premium rate set by the workers’ compensation board for the organization is $2.00 for each $100.00 of assessable earnings. The actual assessable earnings for the previous year are $800,000.00. The reconciliation of the estimated amount of workers’ compensation premiums to the actual amounts for the annual statement of payroll follows.

STEP ACTION 1 Calculate the actual amount of premiums paid in the previous year (which

were based on an estimate of that year’s assessable earnings) as follows: $750,000.00 x $2.00 = $15,000.00

$100.00 2 Calculate the premiums to be paid on the actual assessable payroll for the

previous year as follows:

$800,000.00 x $2.00 = $16,000.00 $100.00

3 Calculate the balance outstanding as follows:

$16,000.00

-15,000.00 $1,000.00

4

Remit the balance outstanding by the due date.



Upon receipt of the annual statement of payroll, the workers’ compensation board calculates:

the premiums on the difference between the previous year’s actual and estimated payroll

the premiums for the current year based on the employer’s estimated assessable payroll

In Québec, the CNESST verifies if the total premiums paid during the year are sufficient based on the actual wages reported. If there is a balance owing, the workers’ compensation board invoices the employer and issues an assessment notice. Note: Most jurisdictions require the balance due to be paid within 30 days of the billing date of the assessment notice or March 31, whichever date is later.

Late Filing Penalties Failure to file the annual statement of payroll by the due date will result in penalties to the employer. The following table details the late filing penalties: Exhibit 7-12

JURISDICTION LATE FILING PENALTIES

Alberta Employers who fail to file the annual return on or before the last day of February are charged a 10% late filing penalty based on the net premium resulting from the previous year's adjustment and the current year's premium. Under-estimating penalty Under-estimating penalties apply when the actual insurable earnings reported on the annual return exceed 150% of the last recorded estimate. The amount of the under-estimating penalty is equal to 10% plus interest of the difference between the actual assessment and 150% of the estimated or provisional assessment.




British Columbia Employers who fail to file an annual report (the Employer Payroll and Contract Labour Report) will be subject to a late-filing penalty ranging from $50.00 to $1,000.00 depending on the amount of the assessable payroll. Under-reporting penalty Employers who under-report their business’s assessable payroll will be charged an 8% penalty on the additional assessment.

Manitoba Employers who fail to file the Annual Payroll Form may be subject to a penalty of 5% or 10% of their WCB assessment to a maximum of $5,000.00, depending on the infraction. Under-reporting penalty The penalty is 15% of the difference in the WCB assessment where a WCB audit determines the employer under-reported their workers’ earnings.

New Brunswick The late filing penalty of the Employer Payroll Report will be either:

a minimum penalty of 5% of the previous year’s actual assessment for forms received after the last day of February

10% of the previous year’s actual assessment for forms received more than 30 days after the last day of February

The penalty will be limited to $500.00 per year. Under-estimating penalty If an employer has underestimated its annual assessable payroll by more than 25% over the calendar year, WorkSafeNB may charge an additional 12% of the actual assessment, including the 25% allowance.




Newfoundland and Labrador Penalties can range from $50.00 to $2,000.00 depending on the amount of the assessable payroll. Employers in the fish purchasing or wood harvesting industries may be charged a penalty ranging from $12.50 to $500.00. Under-estimating penalty If the actual earnings reported by the employer for the prior year are more than 125% of the estimate, a penalty of 10% will be charged on the portion in excess of the 125%. A penalty is not charged when the difference amounts to less than $50.00.

Northwest Territories and Nunavut

If an employer fails to submit a payroll statement by the deadline stipulated, the WSCC may apply a penalty. This penalty will be equal to:

15% of the employer’s assessment for the previous year or

15% of a new employer’s assessment for the current year

A minimum of $25.00 and a maximum of $10,000.00 will be charged. Monthly interest is charged on the penalties for late reporting. Under-estimating penalty If employers knowingly underestimate their payroll by 25% or greater in any year, the WSCC may apply an additional 10% penalty on the assessment for the underestimated portion over 25%.

Nova Scotia Where an employer fails to register with the Board upon becoming an employer, the employer is liable to a penalty equal to 10% of the employer's assessment, including the assessment levied for the period of non-registration. A $50 penalty is charged for late submission of the Annual Subcontractor Report.




Ontario If the annual Reconciliation Form is not received by the due date, the WSIB will calculate a premium for the reconciliation period and charge 1% of that amount (to a maximum of $1,000.00) for each month the form is not received.

Prince Edward Island If an employer fails to meet the registration deadlines, the WCB apply a 5% penalty of the employer’s annual assessment. A minimum of $50 and a maximum of $500 will be charged for each assessment year. Under-estimating penalty The penalty for underestimating total assessable payroll by more than 25% is 10% of the difference between the actual and 125% of the estimated payroll.

Québec The penalty is 5% of the previous year’s actual assessment for each day the statement is late, plus interest. Interest is calculated on the assessment plus the 5% penalty at the Bank of Canada prime interest rate plus 2%. Under-remitting penalty The CNESST will not impose penalties for any under-remittances provided the employer uses the prescribed installment rate(s) assigned by the Commission throughout the year. If under-remittances are a result of any other reason, penalties of up to 15% of the difference between the premiums that were paid and the premiums that should have been paid will be imposed.




Saskatchewan Employers who file their Employer Payroll Statement after the last day of February deadline will be charged 5% of the previous year’s actual premium. For each 30-day period until the statement is received, an additional 5% of the previous year’s actual premium will be charged, to a maximum of 15%. The total late-filing penalty will not be less than $5.00 or more than $500.00. Employers may also be liable for the cost of all work-related injuries incurred by their employees during the period they are in default. Under-estimating penalty If the payroll estimate varies significantly from the actual payroll for the year, a penalty or credit will be applied as follows: if the actual payroll is more than 50% higher than the

estimate, employers will be charged a 6% penalty; or if the actual payroll is less than 50% of the estimate,

and if the employer has already paid their premiums, a 6% credit will be applied to their account.

Yukon Employers who file their Employer’s Payroll Return

(EPR) after the last day of February deadline are charged a penalty (minimum of $50.00 and maximum of $5,000.00) based on the previous year’s assessments. Under-estimating penalty When an employer has filed its EPR and its actual payroll is more than 125% of its estimated payroll, the employer is subject to a penalty which will be at a rate set by Order of the Board of Directors, calculated on the assessments due on the amount of payroll above 125% of the estimate. It will also include an annual interest charge on outstanding assessments over 125% from the date when they were due (April 1 of the prior year).



Content Review The workers’ compensation board in each jurisdiction requires that an annual

statement of payroll is completed and filed by all covered employers to determine the amount the employer will be required to pay for workers’ compensation premiums.

Information required on the annual payroll statement includes:

o gross actual payroll for the previous year

o actual assessable payroll for the previous year

o an estimate of the total assessable payroll for the current year (not required in Québec)

The annual statement of payroll is used to reconcile the amount reported as an estimate of assessable earnings for the previous year to the actual assessable earnings for the year, and, where required, to calculate any outstanding premiums owing for that year.



Review Questions 16. What three amounts are reported on the workers’ compensation annual statement of

payroll?

17. List two ways in which the workers’ compensation bodies use the annual statement of

payroll. 18. Calculate the employer’s annual assessment in each of the following situations:

a. The actual assessable payroll is $1,650,000.00. The premium rate is $2.37 per $100.00 of assessable payroll.



b. The actual assessable payroll is $325,000.00. The premium rate is $0.85 per $100.00 of assessable payroll.



Chapter Review Questions and Answers

1. Why might an organization be required to provide workers’ compensation coverage for a contract worker?

An organization may be responsible for ensuring that any independent operator or

business hired under a contract for service is registered with workers’ compensation and paying regular premiums. If they are not, the organization could be liable for the premiums owing in connection with the work or service performed on the payer’s behalf.

2. True or False. Bonus payments are considered assessable for workers’ compensation in

all jurisdictions.

True. 3. Wages in lieu of notice are considered assessable in the following jurisdictions:

a. Manitoba, Nunavut, Prince Edward Island, Yukon b. British Columbia, Québec, Saskatchewan c. Alberta, Northwest Territories, Ontario d. a and c

4. Complete the following chart:


EARNINGS CURRENT YEAR

New Brunswick $62,700.00

British Columbia $81,900.00

Manitoba $127,000.00

Québec $72,500.00

Nova Scotia $59,300.00

Northwest Territories $90,600.00

Ontario $88,500.00



5. a. Calculate the total assessable earnings for the following Ontario payroll:

EMPLOYEE GROSS

EARNINGS

ANNUAL MAXIMUM

ASSESSABLE EARNINGS

EXCESS EARNINGS

Nadira Singh $98,432.12 $88,500.00 $9,932.12

Jamie Barnacoat $20,559.24 $88,500.00 $0.00

Chris Carter $100,078.10 $88,500.00 $11,578.10

Alfred Ho $42,300.00 $88,500.00 $0.00

Totals $261,369.46 $21,510.22 Total gross earnings $261,369.46

Less total excess earnings - 21,510.22 Total assessable earnings $239,859.24 b. Calculate the total annual assessment using the premium rate of $0.96/$100. To determine the total annual assessment, the total assessable earnings are

multiplied by the premium rate. $239,859.24 x 0.96 = $2,302.65 100 6. Calculate the total weekly assessable earnings for the following Québec construction

industry payroll:

EMPLOYEE GROSS

EARNINGS WEEK 1

GROSS EARNINGS

WEEK 2

GROSS EARNINGS

WEEK 3

GROSS EARNINGS

WEEK 4 Véronique Bolduc

$896.00 $943.00 $1,396.26 $1,232.70

Audrey Verreault

$1,801.64 $1,974.64 $1,801.64 $1,927.64

Claire Roy $759.00 $845.00 $827.00 $793.00



VÉRONIQUE BOLDUC

WEEK 1 WEEK 2 WEEK 3 WEEK 4

Gross earnings $896.00 $943.00 $1,396.26 $1,232.70

Weekly maximum $1,390.49 $1,390.49 $1,390.49 $1,390.49

Excess earnings $0.00 $0.00 $5.77 $0.00

Assessable earnings $896.00 $943.00 $1,390.49 $1,232.70

AUDREY VERREAULT


Gross earnings $1,801.64 $1,974.64 $1,801.64 $1,927.64

Weekly maximum $1,390.49 $1,390.49 $1,390.49 $1,390.49

Excess earnings $411.15 $584.15 $411.15 $537.15

Assessable earnings $1,390.49 $1,390.49 $1,390.49 $1,390.49

CLAIRE ROY WEEK 1 WEEK 2 WEEK 3 WEEK 4

Gross earnings $759.00 $845.00 $827.00 $793.00

Weekly maximum $1,390.49 $1,390.49 $1,390.49 $1,390.49

Excess earnings $0.00 $0.00 $0.00 $0.00

Assessable earnings $759.00 $845.00 $827.00 $793.00


Assessable earnings

$896.001,390.49

+ 759.00$3,045.49

$943.001,390.49

+ 845.00$3,178.49

$1,390.49 1,390.49

+ 827.00 $3,607.98

$1,232.70 1,390.49 + 793.00

$3,416.19



7. In which two jurisdictions does the industry type affect an organization’s workers’ compensation premium remittance frequency?

In British Columbia and Newfoundland and Labrador the industry type, for example, fishing and wood harvesting industries, affects the remittance frequency.

8. List the criteria that must be met before an employer may be considered eligible to make

workers’ compensation payments in multiple installments.

In jurisdictions that provide an installment plan, the employer must meet all of the following criteria to be eligible to participate:

the employer’s total remittance for the year exceeds a specified minimum amount

the employer’s account is not in arrears the annual statement of payroll has been received by the due date

9. A quarterly remitter in British Columbia must send in workers’ compensation payments no later than:

a) the 20th of the month following the end of each quarter b) the 15th of the month following the end of each quarter c) the 20th of the following month d) the 15th of the following month

10. True or False. Employers with a Commission des normes, de l’équité, de la santé et de la

sécurité du travail account remit their premiums to the Canada Revenue Agency according to their source deduction remittance frequency.

False. Employers with a Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST) account remit their premiums to Revenu Québec according to their source deduction remittance frequency.

11. In which jurisdiction may an employer be liable for workers’ injury expenses during the

time the employer’s premium is unpaid?

Saskatchewan. 12. In which jurisdiction may the WCB order an employer with unpaid premiums to cease

employing workers until the default is remedied to the satisfaction of the board?

Yukon.



13. List three areas that may require particular attention when it comes to reconciling workers’ compensation remittances.

verifying that each type of payment or benefit is being correctly classified for assessability using the appropriate jurisdiction’s assessable earnings definitions

updating manual and cancelled cheques each pay period for any payroll corrections, bonus runs, and taxable benefits (for example, gifts and awards, automobile taxable benefits)

monitoring provincial and/or territorial annual maximum assessable earnings for the current year

ensuring that any inter-jurisdictional transfers of employees are reported accurately and on time

including contract workers who may not have a clearance certificate

excluding uncovered executives (for example sole proprietors, directors, or their family members who reside with them) from the periodic assessment statement

14. Which documents might a workers’ compensation auditor want to review during an

employer audit? Employers must ensure that all financial records are readily accessible for the auditor's review. These can include the following:

financial statements

payroll records

year-end slips and related summaries

tax returns

general ledgers

accounts payable ledgers

invoices

cancelled cheques and cheque stubs



15. You are the Payroll Manager for Inter-provincial Marketing Inc. You have employees in Ontario and Saskatchewan. The annual assessable earnings in each province are as follows:

Ontario $2,500,000.00 Saskatchewan $ 800,000.00

When are the premium remittances due during the year?

Ontario – on the last day of the month following the reporting period

Saskatchewan – April 1st and September 1st 16. What three amounts are reported on the workers’ compensation annual statement of

payroll? The following amounts are reported on the workers’ compensation annual statement of payroll:

gross actual payroll for the previous year (in general, this is the total amount reported in box 14 of the T4s and Box A of the RL-1s for Québec)

actual assessable payroll for the previous year (the gross payroll less the earnings paid in excess of the annual maximum assessable earnings)

an estimate of the total assessable payroll for the current year (not required in Québec)

17. List two ways in which the workers’ compensation bodies use the annual statement of

payroll. The workers’ compensation bodies use the annual statement of payroll to:

compare the employer’s estimated payroll for the previous year to its actual payroll in order to determine whether any adjustments to the employer’s account are necessary

set the assessment rate for the current year based on the employer’s estimated assessable payroll



18. Calculate the employer’s annual assessment in each of the following situations:

a. The actual assessable payroll is $1,650,000.00. The premium rate is $2.37 per $100.00 of assessable payroll.


$1,650,000.00 x $2.37 $100.00 = $39,105.00

b. The actual assessable payroll is $325,000.00. The premium rate is $0.85 per $100.00 of assessable payroll.


$325,000.00 x $0.85

$100.00 = $2,762.50

Chapter 7 Workers’ Compensation€¦ · Workers’ Compensation Remittance Process ... A payer of...

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