Under new legislation, independent operators, sole proprietors, some partners in a partnership and some executive officers who work in the construction industry(1) will also be required to have WSIB coverage starting in 2013, these individuals are deemed workers for WSIB purposes.
Generally there seems to be two exemptions from this mandatory coverage, if the work is exclusively home renovation work on an existing private residences that are occupied by the person who directly retains the contractor, or in the case of a partnership or corporation where one partner or one executive officer does not perform construction work.
WSIB at thier sole discretion can determine if the individual qualifies as an executive officer or partner, and meets the criteria for exemption.
Insurable Earnings, or the amount you will pay WSIB premiums are subject to the maximum earnings similar to any employee. The following are included in the calculation of Insurable Earnings;
Proprietors with workers and Partnerships,
The insurable earnings are the individual’s annual self-employment business income as reported to the CRA as Net business income (Line 135) on the individual’s income tax return or in the case of a partnership, each partner’s share of the total net business income is reflected in their own income tax returns.
Insurable earnings, not only includes compensation via employment from T4’s, which would be expected. However, WSIB has decided that executive compensation also includes directors fees and dividends paid. A planning opportunity may exist to pay dividends to the shareholders via a holding company in order to alleviate the issue of paying WSIB on the latter income amounts paid to shareholders.
Contact your trusted advisor to discuss how these changes will affect you as well as any planning opportunities that exist.
Note (1) Construction Industry means any of the industries listed by WSIB in Class G – Construction of Schedule 1