Lesson 2: Personal Taxes - Calculating Employment Insurance Premiums

   Constructing Knowledge

Employment Insurance premiums are calculated much like CPP contributions. However, there is no initial exemption ($3 500) when calculating EI. As with CPP, EI premiums are based on annual gross pay, which may need to be calculated.

The EI premium percentage is 1.88% and the maximum annual amount is $913.68.

EXAMPLE 1

Cardinal works for a stucco company and earns $32 195/year. How much EI does he pay per year?

Solution


EI = $32 195.00 × 1.88%
= $32 195.00×0.0188
= $605.27

Cardinal's annual EI contribution is $605.27.

   Multimedia

A video describing the calculation of Employment Insurance premiums is provided.


EXAMPLE 2

Doris is an instrument technician with a local oilfield company and earns $80 000.00/year. What would be her monthly EI deduction?

Solution


EI = $80 000.00 × 1.88%
= $80 000.00 × 0.0188
= $1 504.00

The maximum annual amount is $913.68 so Doris will only contribute $913.68.

To calculate Doris' monthly contribution, divide the annual amount by 12.

Monthly EI = $913.68 ÷ 12
= $76.14

Doris' deduction for EI is $76.14/month.


Now, it is your turn! Complete the questions in your Chapter 1, Lesson 2 Practice Makes Perfect that refer to Employment Insurance.



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