WorkSafeBC and Owner/Shareholder Compensation
The Workers’ Compensation Board of British Columbia (WorkSafeBC) collects insurance premiums from registered companies based on their reported payroll to cover costs associated with workplace injuries/illnesses like healthcare, wage loss and rehabilitation. In return, registered firms receive protection against lawsuits by injured workers.
Do I need to register with WorkSafeBC?
All employers are legally required to register unless they are exempt. WorkSafeBC defines an employer as “a person or firm that hires workers or unregistered subcontractors” and “a self-employed proprietor, partnership, corporation, society, or any other type of legal entity.”
You need to register for WorkSafeBC insurance coverage if:
- You own a business that hires and pays workers on a full-time, part-time, casual or contract basis.
- You own an incorporated company actively engaged in business. Shareholders, directors, officers of the corporation and principals who are actively involved in the company are considered workers and must have WorkSafeBC coverage.
- You employ contractors who do not operate as an independent business and are either not eligible for WorkSafeBC coverage or have declined to purchase WorkSafeBC’s optional coverage.
Who is exempt from registering?
- If you meet certain conditions, you may be exempt if you work in the motion picture and television industry or commercial fishing industry, your trucking/transport business operates in B.C., your business or workers cross provincial/national boundaries, or you are a physician providing professional services to one of B.C.’s health service authorities.
- Self-employed proprietors or partners in a partnership who do not hire any workers or unregistered contractors. In this case, you may be eligible to apply for Personal Optional Protection to cover your lost salary and medical expenses if injured on the job.
- Personal service corporations where the shareholder is the only worker. The shareholder will be considered a worker of the service recipient and covered under their WorkSafeBC account.
- When two companies are under common ownership and the first firm only exists to provide management or labour services to the second firm, the first firm may be exempt and covered under the second firm’s WorkSafeBC account.
- Personal financial holding companies where the only workers employed are the principal shareholders and company activities are limited to managing personal investments.
As an owner/shareholder, are premiums paid on my compensation?
First determine if you are a shareholder who is actively involved in your company (e.g. you receive T4 slips, management fees, stock options, dividends, or have executive, management, or signing authority). If so, your shareholder earnings are “assessable”—this means they must be reported to WorkSafeBC and will be included when calculating your premiums.
Below are 3 common types of earnings that tend to cause confusion:
Dividends are not assessable unless paid as remuneration for activity in the company. Consider the nature and extent of the work you performed, the timing of the dividend, and whether you received a salary for the work. If the salary does not reasonably reflect the work performed, then the dividend is assessable.
Shareholder Loan Repayments
Shareholder loan repayments are not assessable unless there is evidence that they are supplementing or replacing a drop in income. For example, say you have consistently received $4,000 monthly income from the company, but this is subsequently reduced to $2,000 and you begin to receive shareholder loan repayments of $2,000. Here there is evidence to support that loan repayments are being received as remuneration, so they would be assessable.
You and/or some of your employees may have administrative and management roles that require regularly dealing with different business industry sectors or affiliated firms. Remuneration for these individuals must be prorated between the different industries/firms based on the relative proportion of payroll attributable to each. Because this is more complicated, we recommend speaking to your accountant about establishing cost accounting procedures to allocate overhead payrolls.
For additional assistance on how to register, report owner compensation and calculate your premiums, please visit the WorkSafeBC website or inquire with us today.