Employment Insurance (EI) and family members

Employment Insurance (EI) premiums can constitute a considerable expense. There are various exemptions from having to remit EI premiums. For example, if you own more than 40% of the voting shares of a corporation, your employment is not subject to EI premiums. There’s another exemption for employees who deal at “non-arm’s- length” with their employer. The problem with this rule is that there’s another rule stating that two related persons are deemed to deal with each other at “arm’s-length” if the circumstances of the employment are substantially similar to what they would be if an unrelated person were to perform the same job.

Tax tip: Consult your professional adviser to determine if there’s any way you can structure the employment of your spouse or common-law partner or other family members to justify EI-exempt status. Your business and family members could also be eligible for a refund.