WSIB: What Is It & Why Do I Need It As A Business Owner?
March 17, 2017
While business owners may see their workplace environment as safe, at any unforeseen time an accident can strike, leaving an employee injured and out of work, and an employer liable. To ensure your employees can receive financial compensation while out of work and that your business is free from legal liability, registering with WSIB was made a requirement. Let’s take a look at how registering your business and your employees with WSIB is paid for, taxed and how it benefits both the business owner and the employees working within it.
What Is WSIB?
When it comes to workplace safety, ensuring your employees are safe from harm is only half the battle. Additionally, you should also make sure that as an employer, you are covered from any liability should an accident happen on the job. WSIB, also known as the Workplace Safety & Insurance Board is a government agency designed to register businesses and their employees in order to cover all legal and financial liabilities in the event of injury caused during or due to work.
If your type of industry or work does not fall into the category of exemplified industries found here, you are required to register your business and employees under WSIB. Much like required car insurance, this coverage will benefit both lost wages for an employee and financial liabilities for employers. Some exemplified industries include, but are not limited to, banks, computer software, private healthcare and funeral services.
How Does It Work?
Essentially, employers contribute to a province-wide insurance fund, and these contributions, also known as insurance premiums, are based on the employer’s payroll and accident history. For example, a mining company would have a higher premium than a restaurant.
Most WSIB claims are fairly straight forward. In the event of an accident, an injured worker will be compensated for lost wages by the WSIB on a “No Fault” basis, which means that compensation will be paid no matter who is at fault. However, the exception being that the accident was caused within the realm of their job description and no severe negligence occurred. While an employer does hold the right to contest an injured employee’s WSIB claim, the WSIB will usually give the employee the benefit of the doubt, and aims towards getting an injured employee back to work as soon as practically possible.
How Much Is My Premium?
Typically, your WSIB insurance premium rate will be calculated when you register your business and its employees. The final number will be based on your history of injuries and related costs, overhead charge and unfunded liability amortization charge. This premium will be taxed from your employees on each pay, in exchange for coverage of lost wages should they be injured or fall ill due to their job. The rate of your premium can increase or decrease over time if linked to any additional workplace injuries and the costs related.
Your industry plays a major role in your premium. In 2016, the difference of premium rates varied substantially from industry to industry. For example, while legal services sat at just over .25%, demolition was as high as 13.04%.
While The Canada Revenue Agency (CRA) does require you to report your WSIB benefits as income, you do not pay income tax on them. However, WSIB benefits may affect your tax credits, depending on the amount already being claimed though consulting with an accountant can easily determine how much of your WSIB benefits can be claimed as a tax credit.
Ensuring both you and your employees are covered in the event of an accident is important for you and your business. Keeping up with proper registrations for WSIB coverage can help you cover your financial and legal liabilities, and can help to give you workers compensation while they are out of work. If you have any questions about how your WSIB premiums will affect your income tax and tax credits, feel free to contact any one of our accountants for help at 705-728-6469. We are always happy to help you better understand your business’s expenses, contributions, taxes, and obligations.