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Construction Business Alert — New WSIB Rules Take Effect for 2013 - by Jane Adams 

Canadian Tax Adviser

 

November 13, 2012

 

Jane Adams
Waterloo, Indirect Tax

 

Companies and individuals doing construction in Ontario who did not have to pay Ontario Workplace Safety and Insurance Board (WSIB) premiums in the past may now have to begin doing so, effective January 1, 2013. This new mandatory coverage affects independent operators, sole proprietors, some partners in a partnership and some executive officers who work in construction. This new measure could result in WSIB premium cost increases between $3,000 to $15,000 per executive officer. In addition, construction companies and other entities awarding construction contracts should ensure they obtain WSIB clearance certificate, which confirms that a business is registered with WSIB and has an account in good standing.

Independent operators that don't already have WSIB optional insurance can voluntarily pre-register and have WSIB premiums payable and coverage effective on the implementation date. The new compulsory coverage and registration does not apply to individuals who only do home renovation work directly for homeowners. The WSIB may review written documentation such as work proposals, contracts, invoices and other similar documentation to confirm the home renovation exemption.

 

The WSIB rates that companies and individuals included in the new compulsory coverage will pay will depend on their construction activities. These activities include, among others, electrical and plumbing work, industrial maintenance and repair, road building and excavating, drywall installation, painting, carpeting and flooring installation, interior design, roofing, heavy civil construction, millwrighting, masonry and other forms of outside finishing, along with homebuilding and commercial land development.

 

For many executive officers in construction, the new rules will result in the requirement to pay premiums on earnings that were previously not insurable. In the industry, premiums for 2013 can range from $3.69 to $18.31 per $100 of insurable earnings (subject to maximum insurable earnings). However, Ontario recently announced a new reduced rate for some partners and executive officers in construction. Partners and executive officers who are approved for the lower rate may be allowed to do periodic on-site visits, provided that they do not perform construction work. Businesses should determine whether their executive officers in construction qualify for this new rate group.

 

Obtain a clearance certificate for liability protection
The WSIB clearance certificate relieves a principal (e.g., a person awarding a contract) of liability for payment obligations to the WSIB that a contractor or sub-contractor may incur as a result of carrying out the construction contract. A principal who directly retains a contractor or subcontractor to perform construction work must obtain a clearance certificate before the contractor or subcontractor undertakes the work. The certificate must be in effect for the entire time the contractor or subcontractor is performing the work.

 

For more information, contact your KPMG adviser.

 

 

 

 

 

 

Information is current to November 13, 2012. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.

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