Many family farms have grown larger, acquiring and seeding additional acres.
As the family farm expands, so does the demand for skilled labour.
There are a number of things to consider when hiring employees to work with you on your farm, such as government filing requirements, employee retention and having adequate insurance coverage.
Payroll filing requirements
The employer is required to make monthly remittances to the government when employees and other workers on the farm are paid by salary.
These remittances include deductions from the employee’s salary for income tax, Canada Pension Plan and Employment Insurance. There is also an employer portion that must be submitted for CPP and EI.
CPP is calculated at 4.95 percent of pensionable earnings to a maximum of $2,560 each for employee and employer. EI is calculated at 1.63 percent for the employee and 2.28 percent (1.4 times the employee’s rate) to a maximum of $840 for the employee and employer.
The employer must also file a T4 slip by Feb. 28 of each year for each employee.
CPP and EI are allowable wage expenses that are deductible for income tax purposes.
It is important to retain employees once they are hired and trained. Training new employees can take a lot of time and be costly.
An employee retention strategy can be beneficial to the employer and employee.
This can be accomplished through non-taxable benefits, such as supplementary employment benefit plans, moving allowances, reimbursement of moving expenses, contributions to a private health service plan, social events, meal allowances and even special clothing required for the job. Paying for language courses can also be considered if English is not the employee’s first language.
These benefits are non-taxable for the employee and are a tax-deductible expense for the farm.
Except in Alberta, farmers and ranchers on the Prairies are not required to participate in the Workers’ Compensation Board.
Coverage is voluntary and can be used to ensure that workers are covered in the case of a workplace injury.
Other private types of insurance are also available, which can be purchased to safeguard against workplace injuries for both the employee and employer.
Having adequate insurance coverage comforts employees because it ensures that they will receive care if they are injured.
Insurance coverage is an allowable wage expense and therefore deductible for income tax purposes.
Chartered accountant Brenton Marchuk in KPMG’s tax practice in Regina contributed to this article.
Colin Miller is a chartered accountant and partner with KPMG’s tax practice in Lethbridge. Contact: firstname.lastname@example.org.