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Where Do Your Canada EI Dollars Go?

As an employee you are well aware that you pay into the employment insurance program. It does give you some comfort in knowing that should you ever be out of work that you will at least have some dollars to help you through.

For many they go through years of paying into this fund, and never have to use it. For others it seems to be something they need to rely on frequently.

When we hear about all of the unemployment throughout the country many of us assume that the government is probably having difficulty carrying the financial load regarding the EI demands, and in a way our contributions we are making and not using is at least one way of helping those less fortunate.

There are some organizations that belief that the Employment Insurance is really a cash generator for Ottawa. Some stats say that there was in excess of $3.3 billion collected over what was paid out last year, and the future looks even better. Although, this varies in each province.

The Canada Tax Federation has raised an intriguing proposal. They are basically suggesting that an individual’s EI contributions be kept in a separate specific account for each contributing individual. If it is not used throughout their working years, then they would have a nice little nest egg built up for their retirement. If they had to rely on it then they would be able to do so up to the amount they had accumulated. The weak link to this proposal would be what would happen if they ran out of funds that they had accumulated and had no more saved up in their EI account. However, this frequently happens now with many unemployed individuals not finding work before their EI runs out. In many cases they then have to rely on social services programs.

How much you may benefit from EI depends on where you live, each province has its own rules.

Something else that has to be kept in mind is that there are variations in the EI. Most often we think of it has just being used to help individuals who are unemployed. It is often forgotten about or not realized that it can be used during short term sickness, during maternity leave, or a leave of absence where an individual needs to care for a critically ill parent or child. Then there is a separate EI program for the fishing industry.

Knowing the basics of what is happening to your tax dollars may help you to view your tax obligations in a different way. You may agree or disagree with the way this money is being used, but in any even as a tax payer you must be prepared to meet your tax responsibilities.

 

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Sam Seidman, CPA, CA, LPA
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Email: sam@torontoaccountant.ca

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