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November 16, 2021

Small businesses fight for refund of EI premiums

You’ve probably seen or heard the ads warning that many small businesses are unnecessarily paying EI premiums on family members who work in the business since they won’t ever be able to collect benefits.

The rule is that if a family employee is paid about the same and works roughly the same hours as other workers with similar jobs, then EI premiums should be deducted and the person is eligible to claim EI benefits. Sometimes though, ineligible relatives end up paying for something they’ll never enjoy.

This is why they should fight back, say services like Grant's International, GoFoRefund and ei-refund, which will intercede on your behalf with the government, fill out the necessary forms, and help you collect your refund.

The law states that you can go back three years. However, it usually ends up being closer to five years that could be recovered. If you can file the application before December 31, the current year would be the fourth year. Furthermore, you'll also be recovering the EI payments you would make the next year, giving you close to a five-year refund.

That means applications filed prior to December 31 could total over $7000 in refunds per family member, the services claim, not including the annual $1500 saving that will continue each year into the future.

If they don't get you any money back, you don't pay anything. If you do though, the finder’s fee could be as much as 25 to 30 per cent of the take. But that’s still a lot more than you were going to get, they argue.

And they’re right – except the Canadian Federation of Independent Business will do the same thing for free and there’s nothing stopping you from dealing with the government directly, assuming you're used to the paperwork that comes with being self employed.

Has anyone made a successful EI claim? Was it worth the fee or could you have done things on your own just as easily?

By Gordon Powers, MSN Money




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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...