(February 23- 11:55 ET) – Changes to the Employment Insurance Act have been introduced in the House of Commons. These proposals will affect EI benefit repayments for 2000 once they become law. However, says Canada Customs and Revenue Agency, they will not be law until they make their way through parliament.

Starting in 2000, a person who received regular EI benefits for the first time will not have to repay any of those benefits. A person will be considered to have received regular benefits for the first time if he or she received regular benefits for less than one week in the previous 10 years. Regular benefits paid before June 30, 1996, will not be taken into account.

There will be only one net income repayment threshold of $48,750. The repayment of regular EI benefits would be 30% of the lesser of:

  • The regular EI benefits a person received in the year; and
  • The amount of the recipient’s net income in the year that is more than $48,750.

A person who received special EI benefits (maternity, parental, and sickness) will not have to repay those benefits.

Until they become law, Canadians have to calculate your EI benefit repayment for 2000 under the existing rules, says the CCRA, using the information on the T4E slip sent by the agency, as well as the instructions for line 235 in your tax guide.

When the proposed changes become law, the CCRA will review all 2000 income tax returns with an EI benefit repayment and will adjust those that are affected by the changes. These adjustments would reduce the EI benefit repayment to nil or to a lesser amount than that which was originally assessed. This will reduce the total payable on line 435 of your 2000 return.

EI benefit repayment is an amount that reduces your net income, reducing the repayment amount will increase net income on line 236 of your tax return. Certain non-refundable and refundable tax credits are based on net income, an individual’s, and his or her spouse’s combined net income. Consequently, an increase to net income could reduce credits that were previously allowed.

For example, says the CCRA, the non-refundable tax credit for medical expenses could be reduced, as could the refundable provincial credits. “In addition, an increase to your net income could affect the Canada Child Tax Benefit to which you or your spouse may be entitled.”

Once the proposed changes become law, the CCRA will automatically review all affected returns in a timely manner and adjust those that are affected. The CCRA will issue Notices of Reassessment and any required refunds where applicable.
-IE Staff