Employees working outside Canada

The EI premium rate is based on the province of employment. For the 2006 tax year, employers who have employees working in Quebec should deduct at the reduced EI rate of 1.53%. Employers who have employees working outside of Quebec must deduct at the regular EI rate of 1.87%, even when those employees ordinarily reside in Quebec.

Although the intent of the EIA was to require withholding at the higher rate for Quebec residents working outside of Canada, the current wording is such that it requires these employers to deduct at the lower rate.

A change to the legislation has been requested to require withholding at the higher rate for all employees working outside of the province of Quebec, including those working outside of Canada.

As a result, for the 2006 tax year only, the Canada Revenue Agency (CRA), will allow employers who deducted at the higher rate, to either:

• calculate the EI premiums that they overdeducted and remitted in 2006, and reduce any 2006 remittances to recover the overpayment; or

• notify the CRA by a letter or by Form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums, after they have filed their 2006 T4 information slips and summary. They will need to indicate the employees who were affected, and the amount of the credit or refund that can be applied to their 2007 account.

Forms and publications

• Form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums