Steve Payne
London, Ont. family construction firm gets a scare from the WSIB on dividends
Canadian Contractor Coverage Insurance Insurance CoverageBonnie Hardy expressed relief that her London, Ont. firm's dividends paid to her family would not, finally, be liable for WSIB premiums - after being warned by an auditor that they would be
Some good news on the Ontario WSIB front? The provincial government workplace insurance agency is not, apparently, coming after construction company dividends paid to directors.
In the past month, it had appeared that a completely unpublicized new policy on such dividends had been brought into play by the WSIB. Canadian Contractor learned that a WSIB auditor had cautioned Bonnie and Craig Hardy, owners of Covenant Construction, London, Ont., that dividends to that company’s directors (the owners and their daughters through a family trust) might be considered work income. It would have been the first time that dividends had been classified that way.
On March 2, the insurance board informed Covenant Construction of London, Ont., that WSIB would not, finally, consider these dividends as insurable work income.
Bonnie Hardy expressed her relief. “I’m not opposed to paying into WSIB on some level, but we just thought this would be going too far,” she said, noting that she hadn’t received a dividend through the family trust since last November. Craig Hardy takes advantage of the one insurance coverage exemption WSIB allows for a partner or executive per company.
– John Caulfield
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It is my opinion that WSIB is out of line by including dividends paid to share holders as work income. Earned income is one thing profits to shareholders through dividends is another. Does this article mean that WSIB has stopped including dividends as earned income or is it just dividends received through a family trust??
I would like to hear the answer to mr. Kaye’s question too.
We just had a WSIB audit and they are including director dividends in their assessment of us. The auditor is not changing her mind.
Email us: rkoci@bizinfogroup.ca
How would the auditor know about dividends paid unless you gave them too much information?
A dividend is an investment income and not a salary or employment income regardless of the origin of the dividend. It isn’t even taxed at the same rate as “employment income”.
Would Bell Canada have to cover you under their WSIB account because of a dividend you got paid on stock you owned? Of course not.
First lesson that you need to learn is what a WSIB auditor is entitled to see and ask for. I’m no expert, but I’ve survived many audits relatively unscathed.
Great topic for an article.