EI Premium Reduction

In Canada, employers who provide qualifying short-term disability plans may be eligible for a reduced Employment Insurance (EI) premium rate. The Canada Employment Insurance Commission grants this reduction because the employer’s plan reduces the burden on the EI program by covering employee wage loss due to illness or injury. The Nmbr API supports EI premium reduction through a Tax Property configured on a CRA Remittance Account. Once enabled, Nmbr automatically applies the reduced rate when calculating both employee and employer EI premiums for all employees enrolled in that account.

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How EI Premium Reduction Works

By default, Nmbr calculates EI premiums using the standard rates published by the CRA for the current year. When a business qualifies for a premium reduction, the CRA assigns a reduced employee premium rate and a corresponding employer multiplier. The reduced rate applies to all employees whose EI premiums are remitted through the associated CRA Remittance Account. The employer premium is then calculated using the reduced multiplier instead of the standard 1.4x factor.

Businesses must apply to the Canada Employment Insurance Commission and receive confirmation of their reduced rate before configuring it in Nmbr. For more information, see the CRA’s EI Premium Reduction Program.

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Enabling EI Premium Reduction

EI premium reduction is configured as a Tax Property on a CRA Remittance Account. The ca::ei_premium_reduction template will appear in the Remittance Account’s available_tax_properties list.

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Step 1: Identify the CRA Remittance Account

The reduced rate is applied to a specific CRA Remittance Account. Most businesses have a single CRA Remittance Account, which is created as part of the standard Tax Agency Configuration. You can retrieve the account using the Remittance Accounts endpoint, filtering by the Business Entity. If the business has multiple CRA Remittance Accounts (e.g., for different divisions) and the reduced rate applies to more than one, you will need to create a separate Tax Property for each account.

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Step 2: Retrieve the Tax Property Template

Fetch the template to understand the required fields and their formats. See the Tax Property Templates API reference for details. The template key is ca::ei_premium_reduction.

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Step 3: Create the Tax Property

Create a new Tax Property using the Tax Properties endpoint. The Tax Property requires the following:

• owner_id — The ID of the CRA Remittance Account.
• type — Set to ca::ei_premium_reduction.
• effective_from — The date the reduced rate takes effect. This should align with the start of the rate’s validity period as confirmed by the CRA (typically January 1 of the calendar year).
• value — A JSON object containing the reduced rate details.

The value object accepts the following fields:

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Managing the Reduction

EI premium reduction rates are typically issued on an annual basis. At the start of each year, you should update the Tax Property to reflect the new rate.

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Updating the Rate

To update the rate for a new year, end the current Tax Property by setting its effective_to date to the last day of the current rate’s validity period (typically December 31). Then create a new Tax Property with the updated rate values and an effective_from of January 1 of the new year. See the Tax Properties guide for details on ending and creating Tax Properties.

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Removing the Reduction

If a business no longer qualifies for the EI premium reduction, end the Tax Property by setting its effective_to date. Nmbr will revert to using the standard EI premium rates for all payrolls with a pay date after the effective_to date.

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Payroll Impact

Once the Tax Property is active, Nmbr automatically applies the reduced rate to EI premium calculations on all pay stubs that are enrolled in the associated CRA Remittance Account. The reduced rate is used for payrolls where the pay_date falls within the Tax Property’s effective date range. The EI premium breakdown is visible on each pay stub’s statutory withholding line items. You can verify the applied rate by reviewing the Statutory Withholding Line Items for a payroll.