Employment Insurance clawback will occur if your total income exceeds a certain amount, discussed below. Employment Insurance aims to provide temporary income replacement to Canadians who may have lost their jobs through no fault of their own due to re-structuring, shortage of work, seasonal lay-offs, etc. Run by Employment and Social Development Canada, (ESDC), the program aims to minimize the financial hardship during this difficult time by providing a taxable weekly benefit that can last for 14-45 weeks.
Receiving EI Benefits
After you’ve applied and your application has been accepted, your first payment should be received within 28 days with a 1 week waiting period in between. Bi-weekly reports mut be completed in order to continue receiving payments. The bi-weekly reports confirm your continuous eligibility.
If you are employed and earn income during the time you’re receiving benefits, you can keep 50 cents of your EI benefits, up to 90% of the weekly insurable earnings.
Example
Steve was laid off when his bank branch closed down due to low traffic. His weekly earnings were $550. It was determined that his weekly employment insurance benefit was $302.50. (55% x 550) Steve has found a part time job as a teller where he works 2 days a week earning $250 per week.
Due to his part time employment, Steve’s EI benefits are lowered by 50 cents for every dollar earned or $125. ($250/2 = $125). This part time employment would reduce Steve’s EI benefit to $177.5 ($302.50 – $125) = $177.50.
Steve’s total take home pay is $177.50 from his EI benefits plus $250 per week = $427.50
Receiving Benefits Outside of Canada
If you’re receiving employment insurance benefits and are planning a vacation outside of Canada, you’re permitted to continue to receive the benefits as long as you declare your time away in the by-weekly reporting and can prove that you’re available to return to Canada within 48 hours if a job opportunity arises. Employment and Social Development Canada (ESDC) works together with Canada Border Services Agency to enforce Employment Insurance.
You are allowed to be outside of Canada for a week if you’re:
- Attending a funeral of a family member
- Visiting a family member who is sick or injured
- Accompanying a family member who is seeking medical that is not available in Canada
- Job Interview
- You’re allowed to be outside of Canada for maximum 2 weeks if you have a job interview & seeking employment
Employment Insurance Clawback
Employment Insurance payments are taxable income and must be reported. Anyone receiving payments from employment insurance will get issued a T4E which must be filed with your income tax return for that particular year.
If your net income exceeded $66,375 in 2019, you’ll be required to repay 30% of the lesser of
- your net income in excess of $66,375; or
- the total regular benefits paid in the taxation year.
Example of Employment Insurance Clawback: If your income was $76,376 in 2019, $10,000 above the threshhold then you’ll have to pay back $3,000 ($10,000 * 0.30). If your income was $68,375 in 2019, then you’ll have to pay back all of $2,000. Remember that it’s he lesser of.
Exception on Employment Insurance Clawback
- If no income was earned on EI during last 10 years, you’re not obligated to repay back any benefits, no matter the level of your income.
- If the EI benefits were the following below, no employment insurance clawback exists
- Pregnancy, Parental and Maternal Benefits
- Sickness Benefits
- Compassionate Care Benefits
Other Employment Insurance Benefits
There are various types of other Employment Insurance benefits. We’ve mentioned them below:
- Parental Benefits
- Sickness Benefits
- Benefits for Farmers
- Caregiving Benefits
- Compassionate Care
- Benefits for parents of murdered or missing children
- Fishing Benefits
- Benefits for self-employed people
For more up to date information regarding the employment insurance benefits and employment insurance clawback, visit Government of Canada’s official website.
