Employment Insurance - What you should know
Employment Insurance is not really a tax subject but I thought that I should address something I recently learned. Everyone assumes (we know what happens when you ass-u-me) that if you have been working and you get let go that you will qualify for benefits. Well guess what? There are all sorts of rules and conditions that must be met in order for you to qualify for and collect benefits. I suggest visiting the Service Canada website or going to an office to get all the information specific to your situation. That said here are some things that I feel you must be made aware of.
Firstly if you are a contractor (incorporated or not) or are self-employed (Proprietor) you cannot qualify for benefits. People will say that you can elect to pay in, but the rules and conditions are so ridiculous that most people don’t. My personal opinion is that paying into EI as a self-employed entity is not a cost effective way to do things, and will not offer you the protection that you may be hoping for.
Secondly, an item that most people are not aware of is that benefits are regionally based. By this I mean based on regional rates of unemployment. In short, if you are in a region of low unemployment then the length of time you can collect benefits for is less than the length of time if you are in an area of high unemployment. Funny thing is that if you look at the chart below, nowhere do you see the number 52. Most people think that benefits are for a year, but think again. Check out the link below to see the Service Canada website and what they say about EI.
Regardless of how you feel about what I have shown above, it is the way things are. I know it is not fair. If you pay what everyone else does, you should be entitled to equal benefits. Yah well, this is government. Another point I will make about things being unfair, is that Alberta has a lot of contractors and self-employed, which do not get factored into the rates of unemployment. Again not fair, but really is the government ever fair? Don’t answer. That was a rhetorical question.
On last thing I should point out is that there is a maximum level of benefits you can get so if you are making a high salary you will find EI benefits woefully inadequate. In short, being unemployed sucks, EI in Alberta is less than anywhere else, which sucks, and it will not likely change anytime soon.
In conclusion I would suggest that we all learn from the economic down turn, and start saving for those lean times and get debts under control. This has happened many times before and will happen many times again. It is time to start living like our parents did. We need to save money, and stop living paycheck to paycheck (especially when making big salaries). If we don’t learn from this you can expect a big “I told you so” in approximately 4- 6 years from now. You have been warned.