Canada Revenue Agency
www.cra.gc.ca
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Hiring credit for small business (HCSB)
The 2011 federal budget created a hiring credit for small business (HCSB), a one-time credit intended to stimulate new employment and support small businesses. The HCSB gives small businesses relief from the employer's share of employment insurance (EI) premiums paid in 2011. The credit does this by paying up to $1,000, based on the increase in an employer's EI premiums paid in 2011 over those paid in 2010.
Note
The HCSB is for employers and businesses that pay the employer's share of EI premiums to a payroll (RP) account. Individuals who have chosen to pay EI premiums on their self-employed earnings are not eligible for the HCSB. For more information, contact Service Canada.
How to tell if you are eligible
How the CRA will calculate the credit
How you will receive the credit
Employer EI premiums in 2011 cannot be reduced
Amending, cancelling or adding T4 slips in 2010 or 2011
Employees hired in 2011
New businesses in 2011 will receive the credit
Sold or closed your business
Restructured your business
Time limit for obtaining the credit
HCSB is business income
Registered charities
How to tell if you are eligible
You are eligible for this credit if you meet all of the following conditions:
- you deducted EI premiums from the remuneration you paid to your employees, or paid the worker's share of EI premiums for barbers, hairdressers, fishers, or drivers of taxis and other passenger-carrying vehicles and you remitted these premiums (along with your share of EI premiums) to your payroll (RP) account;
- you reported the income and deductions on a T4 slip and filed this information on your RP account for 2010 (see Note below) and 2011;
- the total of employer EI premiums you paid for 2010 (see Note below) was $10,000 or less; and
- your total employer EI premiums increased in 2011.
Note
If you opened, closed or restructured your business during 2011, your total employer EI premiums for 2010 may be zero. See the information below.
How the CRA will calculate the credit
There is no application form to complete.
If you are eligible, the CRA will automatically calculate the amount of your HCSB using the EI information from the T4 slips you filed with your 2010 and 2011 T4 information returns. The amount to be credited to your payroll account will be greater than $2, but no more than $1,000.
If you have more than one payroll account (RP) under your business number (BN), the CRA will determine if you are eligible to receive a credit by adding the employer EI premiums for all RP accounts under that BN. The amount of credit that each RP account will receive is proportional to the amount of the employer's EI premiums that was paid into each RP account.
How you will receive the credit
Once we have calculated your credit, we will apply it to any outstanding balance on your payroll account(s), and then transfer the remaining credit to the current year. Your statement of account will tell you how we applied the credit.
Employer EI premiums in 2011 cannot be reduced
Even if you are eligible for the HCSB, you cannot reduce your 2011 payroll remittances by the amount of the credit that you think you will receive. We will calculate your eligibility and any credit after we process your 2011 T4 information return.
Amending, cancelling or adding T4 slips in 2010 or 2011
Your eligibility to receive the HCSB and the amount you receive may be affected if you make changes to the 2010 or 2011 T4 information on which your credit is calculated. Once we process amended, cancelled or additional T4 slips, we will recalculate your eligibility for the credit and adjust (increase or decrease) the credit you may have received.
Employees hired in 2011
You do not have to keep special records for employees that you hired or for the increased employer EI premiums that you paid in 2011.
New businesses in 2011 will receive the credit
If you started your business in 2011 and received a new BN, you will receive the HCSB if you are eligible. We will use a zero value for your 2010 employer's share of EI premiums when we calculate the amount of the credit that you are eligible to receive.
Sold or closed your business
If you sold or closed your business in 2010, you will not be eligible to receive the HCSB.
If you sold or closed your business in 2011, you may be eligible to receive the credit if, before the sale or closure, you paid more employer EI premiums in 2011 than you did in 2010 and your total employer EI premiums in 2010 were $10,000 or less.
Restructured your business
If you restructured your business in 2011 and received a new BN, you will receive the HCSB if you are eligible. We will use a zero value for your 2010 employer's share of EI premiums when we calculate the amount of the credit that you are eligible to receive.
Time limit for obtaining the credit
No HCSB will be allowed if we receive your original 2011 T4 return(s) or any amended, cancelled or additional T4 slips for 2010 or 2011 on or after January 1, 2015.
HCSB is business income
If you receive a HCSB payment, you have to claim that amount as income or reduce your EI expense when you file your business return, even if we transferred some or all of this credit to pay off a debt.
Registered charities
If you are a registered charity, you are eligible to receive the HCSB as long as your 2010 employer EI premiums for all RP accounts under that BN were not more than $10,000 and you paid more employer EI premiums in 2011 than you paid in 2010.
