2018 Minimum Wage And Mileage Rate, Other Payroll & HR Issues
With the New Year recently unfolded, there are several trending topics which will certainly impact company owners, especially those who operate their businesses in Canada.
With the New Year recently unfolded, there are several trending topics which will certainly impact company owners, especially those who operate their businesses in Canada. This includes the 2018 minimum wage and mileage rate, as well as other payroll and HR issues that should be given consideration by your business.
One thing that needs to be understood at this point is that the minimum wage in Canada depends on the province. Workers in Alberta enjoy a rate of $13.60 per hour. According to regulations, by October 1, 2018, this will increase to $15. In British Columbia, the minimum wage is $11.35 for all other workers, while a minimum wage of $10.10 can be availed of by liquor servers.
In Saskatchewan, the minimum age is $10.96, while workers in Manitoba enjoy a rate of $11.15. In Ontario, the minimum wage depends on three categories. General workers receive a minimum wage of $14.0. Liquor servers enjoy a rate of $12.20, while students under 18 years old enjoy a rate of $13.15. This is provided that they work less than 28 hours every week.
In Quebec, the rate is at $11.25. Starting May 1, 2018, this rate will increase to $11.75. For those with gratuities, the rate is at $9.45, which will also increase to $9.70 in May 1, 2018. Workers in New Brunswick receive a minimum wage of $11.00.
In Prince Edward Island, the minimum wage is $11.25, which is $0.25 more than what the workers in Newfoundland & Labrador receive, at $11.00. In Yukon, workers receive a minimum wage of $11.32, while in Northwest Territories, the minimum wage is at $12.50. In Nunavut, the minimum wage is at $13.00.
This goes to show that workers in Alberta receive the highest rate as minimum wage, that is, $13.60.
The standard mileage rates for using a car, including other vehicles, are as follows:
55 cents per kilometer (first 5,000 km driven)
49 cents per kilometer after
For provinces in the Northwest Territories, Nunavut and Yukon, there is an additional 4 cents for every kilometer allowed for business travel.
Most of the rates and limits applied in 2017 continue to apply for the year 2018. However, there are two changes that will take effect this year.
The limit applied on the deduction for tax-exempt allowances paid by employers to their employees who are using personal vehicle for purposes of business will increase by 1 cent to 55 cents per kilometer for the first 5000 kilometers driven, with 49 cents per kilometer as additional. These allowances have been intended in order to reflect the primary costs involved in owning and operating a vehicle, including factors such as financing, depreciation, maintenance, insurance and fuel.
The general rate prescribed which is used in determining the taxable benefit that employees can expect relating to the personal use of automobile operating expenses as paid by their employers will also increase by 1 cent, that is, 26 cents per kilometer. For taxpayers who are principally employed in the selling or leasing of automobiles, this rate used in determining the taxable benefit of the employee will also increase by 1 cent per kilometer.
The additional benefit of using a vehicle that is provided by the employer for personal use is separately calculated based on the capital costs, and is also included in the income of the employees.
At the same time, the following limits will continue for 2018:
The capital cost of passenger vehicle ceiling for capital cost allowance (CCA) purposes will stay at $30,000. This also involves the applicable federal, as well as the provincial-territorial sales taxes for all purchases completed after 2017. This ceiling provides a restriction on the cost of a vehicle with which CCA can be claimed for purposes of business.
The maximum deduction for allowable interest for amounts borrowed in purchasing a vehicle will stay at $300 per month. This applies for loans that are related to automobiles acquired after 2017.
The limits on the deductible leasing costs will stay at $800 per month, including applicable federal and provincial-territorial sales taxes. This applies to leases that are entered after 2017. This limit is among the two restrictions on the automobile lease payments deductions. A different restriction prorates the deductible lease costs wherein the value of the vehicle goes over the capital cost ceiling.
Other Payroll & HR Issues
Currently, there seems to be a big deal regarding the minimum wage increase in certain jurisdictions, with employers arguing that they will experience a challenging time adjusting to this new wage rate. Commentators believe that this will end up in increased prices and higher unemployment rate.
Aside from these increases in minimum wage result to financial challenges for employers because of the increase made available for low wage earners, they can also expect to result in some wage compression issues at higher compensation levels.
At the same time, some experts argue that having a higher minimum wage will further boost the economy as it will improve the purchasing power of earners who used to earn lower than what they are earning now. They also stipulate that an increase in minimum wage do not generally result to unemployment, while paying employees a higher wage may also improve productivity among employees. As a result, this will result to employee engagement, retention and reduced recruitment, and balancing training and onboarding costs.
On the part of the employers, however, this may cause some pain. However, in the long run, this may improve the overall economy of Canada. As such, if you are an employer, it may be time for you to become more creative by enhancing productivity in your workplace through business process re-engineering, automation, better option on procedures, as well as enhanced development and learning programs.
While some prices have to increase as a result, you may see your business improve in terms of productivity, and a reduction in poverty overall.