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New WSIB Rules for Ontario Construction Industry — What You Need to Know - by Jane Adams 

Canadian Tax Adviser

 

February 15, 2013

Jane Adams
Waterloo, Indirect Tax

 

The Workplace Safety and Insurance Board (WSIB) announced that as of January 1, 2013, new rules apply to companies and individuals doing construction in Ontario. While the new rules will affect many contractors’ costs, they will also ensure that more companies and individuals doing construction in Ontario have WSIB coverage.

The new rules require almost everyone from the business owner and office staff to the manual labourer to be registered with the WSIB and pay premiums based on the work they perform and each person’s annual earnings. The WSIB maximum insurable earnings ceiling for 2013 is $83,200. Note that in most cases, dividends received by shareholder/employees in the business are included in the computation of insurable earnings.

 

The new changes to the Workplace Safety and Insurance Act can result in fines and penalties against contractors and the sub-contractors who do not comply with the new rules (i.e., if any worker on a job site doesn’t have clearance).

 

Old rules
Prior to the January 2013 changes, independent operators, sole proprietors, partners in partnerships and executive officers of corporations were not required to have coverage, but had the option of taking on coverage with the WSIB.

 

New rules
WSIB coverage is now a requirement and not an option for companies and individuals doing construction in Ontario. Contractors are now liable and can be fined if they do not adhere to the new rules. Construction companies and other entities awarding construction contracts should ensure they obtain a WSIB clearance certificate, which confirms that a business is registered with WSIB and has an account in good standing.

 

Do the new WSIB rules for the Ontario construction industry affect your business?
KPMG has prepared the following checklist to help you determine whether the new WSIB rules affect your business.

 

Question 1 – Does your business operate in Ontario and in the construction business on January 1, 2013?

 

  • If yes, go to question 2.
  • If no, the new WSIB rules do not affect your business.

 

Question 2 – Does your business consist of exclusively performing residential home renovation?

 

  • If yes, go to question 2A.
  • If no, go to question 3.

 

Question 2A – Does your business perform work directly for and get paid directly by the occupant of the residential home or a member of the occupant’s family?

 

  • If yes, the new WSIB rules do not apply to your business.
  • If no, go to question 3.

 

Question 3 – Are you an independent contractor performing non-residential work?

 

  • If yes, your insurable earnings will be subject to the WSIB rate group applicable to your business.
  • If no, go to question 4.

 

Question 4 – Do your business’s executive officers or partners perform any construction work?

 

  • If yes, the executive officer or partner who performs construction work will have his or her insurable earnings subject to the WSIB rate group applicable to the business.
  • If no, one executive officer or partner can be exempt per entity. The exemption must be requested by filing form 1208WA. The rate group 755 for non-exempt executive officers or partners must be requested by filing form 1209WA. The applicable forms must be filed together with or before filing the first WSIB premium remittance form for 2013.

 

Exemptions to the new rules
There are two types of exemption to the new rules:

 

Residential homes
Individuals, partnerships or corporations performing exclusively residential home renovations are exempt from registering with the WSIB under certain circumstances. The exemption will apply to contractors who work directly for the occupant of the residential home or a member of the occupant’s family. The work performed by the contractor also needs to be paid directly by the occupant of the residential home or a member of the occupant’s family.

 

Executive officers
An executive officer or a partner of a company may apply for an exemption from taking on insurance coverage with the WSIB. Such exemption applies to:

 

  • One partner of a partnership;
  • One executive officer of a corporation with workers; or
  • One executive officer of a corporation without workers, but with multiple executive officers.

 

Only one executive officer or one partner per company may apply for an exemption. In order to qualify for the exemption, the individual must not perform any construction work. Such executive officer or partner is only permitted to periodically visit the job site. The exemption does not apply to an independent operator. Eligible executive officers or partners can apply for the exemption by filing form 1208WA – “Partner or Executive Officer in Construction – Exempt from Coverage”.

 

Any other executive officers or partners who cannot apply with the WSIB for the exemption will have their insurable earnings automatically subject to the rate group applicable to their company.

 

Apply to qualify for new rate group
Non-exempt executive officers or partners, who do not perform construction work, must apply in order to be classified as rate group 755 by filing form 1209WA – “Request for Rate Group 755, Non-Exempt Partners and Executive Officers in Construction”. Businesses should determine whether their executive officers or partners in construction qualify for this new rate group. Rate group 755 premium is $0.21 per $100 of insurable earnings, compared to a range of $3.69 to $18.31 for the rate groups that normally apply to construction companies.

 

Insurable earnings of eligible non-exempt executive officers or partners are not considered common earnings and do not need to be prorated. The premium charged on insurable earnings that qualify for rate group 755 follow a separate computation. 

 

Non-exempt executive officers or partners who do not apply with the WSIB for rate group 755 will have their insurable earnings automatically subject to the rate group applicable to their company.

 

Don’t wait for approval to implement changes
The WSIB has not given an opinion on the processing time for forms 1208WA and 1209WA. Employers do not need to wait for the WSIB approval to implement the new changes. Employers need to file the new forms together with or before filing their first premium remittance form for 2013. Monthly and quarterly filers need to comply with the new changes on or before February 28, 2013 and April 30, 2013 respectively.

 

Rules for associated employers
If two or more employers are deemed to be associated under the look-through rule, the premium rate for each employer shall be calculated as if all the operations of the associated employers were carried out by a single employer. This look-through rule should be considered when reviewing the new WSIB rules.

 

Effect on private disability insurance
Prior to the introduction of the new WSIB rules, independent contractors, partners or executive officers might have taken on disability insurance with private insurers. Coverage with the WSIB is now required by law. The WSIB takes precedence for compensating workers who are injured on the job. Those who have or are considering disability insurance with a private insurer (i.e., non-work related claims) may want to discuss with their insurer and understand how the new WSIB rules affect their annual premiums and work related claims.

 

For more information or assistance, please contact your KPMG adviser, or one of the following professionals:

 

Jane Adams                                                         
(519) 747-8230                                                 
janeadams@kpmg.ca

George Singh 
(416) 777- 3900 
georgesingh@kpmg.ca
 
Raffaele Ruberto
(416) 228-7248
rruberto@kpmg.ca

 

 

 

 

 

Information is current to February 15, 2013. 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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