Directors and employment insurance premiums

Crown Corporation Issue Note

Issue

Should employment insurance premiums be deducted from the remuneration paid to Crown corporation directors?

Context

In the private sector, employment insurance (EI) premiums are not deducted from remuneration paid to corporate directors unless those directors are also employed by the corporation. However, special rules apply to Crown corporations. This issue note describes those rules in general terms. Crown corporations are encouraged to contact the Canada Revenue Agency directly for more detailed information.

Analysis

Subsection 6(f) of the Employment Insurance Regulations defines "insurable employment" to include the employment of persons holding the position of director in a Crown corporation listed in Schedule III of the Financial Administration Act. This means that EI premiums must be deducted from the remuneration paid to directors of those corporations. A total of 37 Crown corporations are currently listed in Schedule III.

In general, any form of remuneration paid to a director for his or her services, whether paid on an annual or per diem basis, is insurable whether or not the director is actually employed by the corporation. There are, however, some exceptions to the general rule. For example, EI deductions need not be made from amounts paid in order to reimburse a director for his or her expenses.

Corporations that are unsure whether amounts paid to their directors constitute insurable income for purposes of EI should contact CRA to request a ruling.

Conclusion

Employment insurance premiums must normally be deducted from fees paid to the directors of any Crown corporations listed in Schedule III of the Financial Administration Act.

Further information

For further information, contact the local Tax Services Office.

Updated

February 19, 2010

Prepared by

Treasury Board Secretariat
Government Operations Sector
Governance Directorate

Consultation

Canada Revenue Agency
Senior Personnel and Public Service Renewal, Privy Council Office
Legal Services, Treasury Board Secretariat