Published | Category : Source deductions and contributions
New Reduction of the Health Service Fund Contribution for SMBs as of 2018
On August 15, 2018, the Minister of Finance announced a new reduction of the health services fund contribution rate.
Increase in total payroll threshold for the reduced contribution rate
For 2018, the total payroll threshold for the reduced health services fund contribution rate will increase from $5 million to $5.5 million. It will then rise gradually from 2019 to 2022 and be indexed annually as of 2023.
Decrease in health services fund contribution rate
If you are an employer other than a public-sector employer and your total payroll is less than $5.5 million, you can qualify for the reduced contribution rate, subject to certain conditions. You must use the contribution rate for your sector of activity to calculate your health services fund contribution for the year.
See the table below for the health services fund contribution rates for 2018 for each sector of activity.
Contribution rate for 2018 | |||
---|---|---|---|
Total payroll (TP) | Salaries or wages paid before March 28, 2018 | Salaries or wages paid between March 28 and August 15, 2018 | Salaries or wages paid after August 15, 2018 |
$1,000,000 or less | 1.50% | 1.45% | 1.25% |
$1,000,001 to $5,499,999 | 0.8867% + (0.6133% x TP/1,000,000) | 0.8256% + (0.6244% x TP/1,000,000) | 0.5811% + (0.6689% x TP/1,000,000) |
$5,500,000 or more | 4.26% | 4.26% | 4.26% |
Contribution rate for 2018 | |||
---|---|---|---|
Total payroll (TP) | Salaries or wages paid before March 28, 2018 | Salaries or wages paid between March 28 and August 15, 2018 | Salaries or wages paid after August 15, 2018 |
$1,000,000 or less | 2.30% | 1.95% | 1.75% |
$1,000,001 to $5,499,999 | 1.8644% + (0.4356% x TP/1,000,000) | 1.4367% + (0.5133% x TP/1,000,000) | 1.1922% + (0.5578% x TP/1,000,000) |
$5,500,000 or more | 4.26% | 4.26% | 4.26% |
If you stop carrying on a business or making payments in the year, you must calculate your health services fund contribution rate for 2018 as shown in the example below.
Salaries or wages paid before March 28, 2018 | Salaries or wages paid between March 28 and August 15, 2018 | Salaries or wages paid after August 15, 2018 | |
---|---|---|---|
Salaries or wages subject to the contribution | $600,000 | $300,000 | $50,000 |
Contribution rate | 1.50% | 1.45% | 1.25% |
Contribution to the health services fund | $9,000 | $4,350 | $625 |
Contribution for the period from January 1 to August 29, 2018: $9,000 + $4,350 + $625 | $13,975 | ||
Keep your calculations in case we ask for them. |
Reduction of the health services fund contribution for the creation of specialized jobs
Form LE-34.1.12-V, Reduction of the Contribution to the Health Services Fund: Creation of Specialized Jobs, will be updated to incorporate the new rates for 2018. In addition, the denominator in the fraction used in the formula to determine your reduction rate if your total payroll is over $1 million has increased from $4 million to $4.5 million.
Periodic payments of the health services fund contribution
Your periodic payments after August 15, 2018, may be adjusted to take into account the total payroll threshold increase for 2018.