Ontario WSIB’s Analogue to CRA’s Voluntary Disclosure

Employers who have not fulfilled their obligations to register under Ontario’s Workplace Safety and Insurance Act, 1997 (WSIA) have a potential remedy of voluntary registration. This system is similar to the CRA’s voluntary disclosure program, but is more financially generous; no more than a year’s worth of unpaid premiums is payable retroactively, while the CRA has no limitation period on tax owing if the conditions for going beyond the normal reassessment period are met (ITA subsection 152(4) and TI 2011-0401921C6, June 3, 2011).

WSIA section 75(1) and Ontario regulation 175/98 establish two categories of industries to which mandatory Workplace Safety and Insurance Board (WSIB) coverage applies—schedule 1 and schedule 2. Schedule 1 employers pay WSIB premiums and are subject to the collective liability provisions of the WSIA. Schedule 2 employers are self-insured and pay the full amount of their WSIB claim costs plus an administrative fee. Schedule 1 employers include offices of professional accountants; forest products, mining, and related industries; other primary industries; manufacturing; transportation and storage; retail and wholesale trades; construction; government and related services; and other services (including employers that supply labour, restaurants, and hospitality). Schedule 2 employers include railways, airlines, provincial governments, municipalities, Crown corporations, and federally licensed telephone companies. More than 100 industries are omitted from mandatory coverage, including financial institutions, law firms, and doctors’ and dentists’ offices. For a corporation, the penalty under WSIA sections 151(1) and 158(1) for failing to comply with mandatory registration is up to $100,000; for an individual, the penalty is up to $25,000, up to six months’ imprisonment, or both. The penalties apply to both schedule 1 and schedule 2 employers.

An employer that has not registered with the WSIB but is required to do so because it is in an industry listed in schedule 1 or 2 may be eligible for the WSIB’s voluntary registration policy. (Note the confusing terminology: some employers that are not required to register may nevertheless do so, but such registrations are “optional insurance,” not voluntary registrations.) The current version of this policy is set out in WSIB operational policy document 14-02-15 and is described in a supplementary administrative practice document. The policy is effective February 1, 2014, with no expiry date (although it is to be reviewed after five years). Upon an employer’s successful voluntary registration, the WSIB may waive penalties; refrain from investigating and prosecuting; and require the payment of no more than 12 months of retroactive premiums (through starting premiums with the effective date of registration—the later of the date of the first employee hire and 12 months prior to the month of voluntary disclosure). The use of the word “may” in the list of types of relief implies that there is no guarantee of the relief that will be provided. A schedule 2 employer’s gain from the policy is only the waiver of penalties and prosecution, since premiums are not applicable.

The statutory authority for the policy is somewhat unclear. Although the policy lists various subsections of the WSIA, none of these provisions provide the same clear authority for administrative discretion afforded in ITA subsection 220(3.1).

Voluntary registration is required to be complete (that is, the application provides the same information that would be required for a normal registration), accurate, and voluntary. Specifically, the WSIB registration will not be considered voluntary if the WSIB has identified the employer’s failure to register through the WSIB’s own actions (such as audits and classification reviews); the information exchange agreement between the WSIB and the CRA; anonymous telephone calls to the WSIB; and claims submitted to the WSIB by workers. The policy does not offer a no-names option; thus, the non-complying employer cannot determine the precise implications of coming forward without identifying itself.

Voluntary registration applies only to employers registering for the first time. Therefore, it does not apply to an employer with one or more existing accounts (such as a manufacturing company that has WSIB accounts for each plant, but has failed to register for some plants). It also does not apply to an employer that has had a WSIB account in the past and is seeking to reactivate it.

Jamie Herman
Fruitman Kates LLP, Toronto
jamieh@fruitman.ca

Canadian Tax Focus
Volume 5, Number 1, February 2015
©2015, Canadian Tax Foundation