7 Cost Savings Tactics7 Cost Savings Tactics

A quick review of things we can do A quick review of things we can do now in the current economynow in the current economy

EI Low RateEI Low Rate

Most Employers have a benefit Most Employers have a benefit plan for their employees.plan for their employees.

Most Employers don’t benefit Most Employers don’t benefit from the rate reduction of the from the rate reduction of the employer portion of the EI.employer portion of the EI.

How It WorksHow It Works

Must have an identified group on an Must have an identified group on an approved benefit plan.approved benefit plan.

Plan must include short term and long term Plan must include short term and long term disability.disability.

Register the plan – send in documents and Register the plan – send in documents and approval of Union – if Union shop.approval of Union – if Union shop.

http://www1.servicecanada.gc.ca/eng/http://www1.servicecanada.gc.ca/eng/ On approval Reduce the rate from 1.4 to On approval Reduce the rate from 1.4 to

1.2 of the EI deducted from employees1.2 of the EI deducted from employees The reduced rate continues to decrease The reduced rate continues to decrease

over time.over time.

The MathThe Math

Annual Maximum Premium Annual Maximum Premium (Employer, 1.4 x Employee) (Employer, 1.4 x Employee) $1024.51$1024.51

Annual Maximum Premium Annual Maximum Premium (Employer, 1.163 x Employee) (Employer, 1.163 x Employee) $850.37$850.37

Savings is $174.14 per Savings is $174.14 per employeeemployee

Benefits & the Pay StubBenefits & the Pay Stub

Split Benefits:Split Benefits: Insurance is taxableInsurance is taxable Get Employees to pay itGet Employees to pay it Private Medical Plan is not taxablePrivate Medical Plan is not taxable Employer PaysEmployer Pays

Benefit AllowanceBenefit Allowance After the plan is approved After the plan is approved

increase the allowance $5.00increase the allowance $5.00

The Pay StubThe Pay Stub

Gross PayGross Pay X,000.00X,000.00

Benefit AllowanceBenefit Allowance 100.00100.00

InsuranceInsurance 95.0095.00

Taxes etcTaxes etc Y,000.00Y,000.00

Net PayNet Pay

EI ExemptEI Exempt

Self EmployedSelf Employed Or those who own 40% or more Or those who own 40% or more

sharesshares Or those related to those who Or those related to those who

own 40%own 40%

CPP ExemptionCPP Exemption

Must deduct from everyone Must deduct from everyone aged 18 to 69.aged 18 to 69.

Except if they are already Except if they are already drawing CPP or if they are on a drawing CPP or if they are on a disability pension.disability pension.

A number of temporary work A number of temporary work situationssituations

Vacation Pay AccrualVacation Pay Accrual

One shot reduction in taxable One shot reduction in taxable income.income.

If Vacation pay accrual is not If Vacation pay accrual is not recognized there is a one time recognized there is a one time savings used to reduce income.savings used to reduce income.

Not the same restriction as Not the same restriction as shareholder bonus. (Paid within shareholder bonus. (Paid within six months)six months)

SR & D Tax creditSR & D Tax credit

(a) basic research, namely, work undertaken for the (a) basic research, namely, work undertaken for the advancement of scientific knowledge without a advancement of scientific knowledge without a specific practical application in view;specific practical application in view;

(b) applied research, namely, work undertaken for (b) applied research, namely, work undertaken for the advancement of scientific knowledge with a the advancement of scientific knowledge with a specific practical application in view; orspecific practical application in view; or

(c) experimental development, namely, work (c) experimental development, namely, work undertaken for the purposes of achieving undertaken for the purposes of achieving technological advancement for the purpose of technological advancement for the purpose of creating new, or improving existing, materials, creating new, or improving existing, materials, devices, products or processes, including devices, products or processes, including incremental improvements thereto.incremental improvements thereto.

Many Companies do R&DMany Companies do R&D

SystematicSystematic There has to be some There has to be some

uncertaintyuncertainty There has to be documentationThere has to be documentation Some “research” specifically Some “research” specifically

excludedexcluded Market ResearchMarket Research Brand ExtensionBrand Extension

Tax Bulletin Tax Bulletin IT-151R5IT-151R5

Staff ProductivityStaff Productivity

Time wasted online.Time wasted online. 15 minutes a day for ten people at $16/hr15 minutes a day for ten people at $16/hr

Cost $40.00 of additional coffee break / dayCost $40.00 of additional coffee break / day Online gaming is on the increase at workOnline gaming is on the increase at work Face bookFace book

Internet Content Filter cost $75/ monthInternet Content Filter cost $75/ month Break even saving one employee 15 Break even saving one employee 15

minutes a day. 21 days @ $4.00 / dayminutes a day. 21 days @ $4.00 / day

ProductivityProductivity

Remote Work (work from Home)Remote Work (work from Home) Reduces commute time & costsReduces commute time & costs May improve employee satisfactionMay improve employee satisfaction Work EffectivenessWork Effectiveness

Depends on the employee and their Depends on the employee and their environment.environment.

Depends on the nature of the workDepends on the nature of the work Allows flexibility in work scheduleAllows flexibility in work schedule Reduces office requirementsReduces office requirements

Cost Starting at $75/month for up to Cost Starting at $75/month for up to 50 staff.50 staff.

7 Cost Savings Tactics7 Cost Savings Tactics

Low EI RateLow EI Rate Exempt EIExempt EI Exempt CPPExempt CPP Vacation Pay AccrualVacation Pay Accrual R&D Tax Credit (refund)R&D Tax Credit (refund) Staff Productivity (Content Filter)Staff Productivity (Content Filter) Productivity (VPN)Productivity (VPN)