Parents-to-be know the drill: expecting a baby equals applying for EI maternity and parental benefits via Service Canada. While you go through the process, here are three things that might surprise you about the benefits.
1. The application process has a few wrinkles.
When you first apply for EI, you’ll receive a user ID and password. Then you can go online and check your account status at any time. I was thrilled to log in and see my listed start date for receiving mat leave benefits. When that day came and went without receiving any money, I was less thrilled. The holdup? My record of employment. Some employers will e-mail your ROE directly to Service Canada (a faster process) but other employers send you the ROE directly for you to submit. I fell into the latter category and received my ROE later than expected, delaying my payments by, oh, one month. (At least the payments were retroactive!)
2. There’s a two-week waiting period.
You will not receive any EI benefits for the first two-week period. That means two weeks of receiving no income from any sources whatsoever. We all know getting EI is already a financial adjustment. But the two-week period will be pure financial chaos if you’re not prepared.
3. Prepare for a possible tax hit.
Remember the days of getting a refund come tax time? Well, your next tax return just may leave you a little empty-handed. While your employer may withhold enough money from your paycheque for taxes, Service Canada doesn’t show quite the same rigour. (Yes, your EI benefits must be declared as income on your tax return.) Sure, Service Canada will remove some tax, but it likely won’t be enough for you to break even or receive a refund if you have few, if any, deductions (e.g. RRSP contributions, childcare expenses) to offset the tax payable. So, be prepared for the possibility of owing the taxman—and while already living on a reduced income at that!
What surprised you the most about maternity/parental leave benefits?
Deanne Gage has written about all matters financial since 1999. She writes, edits and strategizes out of her Toronto home that’s partially under construction. Besides money issues, she enjoys running fast, jazz music and drinking a quality glass of Merlot. Her two-year-old daughter is quite familiar with money: she borrows it from mom’s wallet for her toy cash register.