How do Payroll Rebates work?
Friday, October 5, 2012
A payroll rebate is an earned incentive, paid out yearly after a company achieves pre-determined targets.
The rebate is a return on a company’s eligible gross payroll. It is issued over a set number of years - usually between three and five - and to a set amount. This means that for every dollar a company spends in salaries and benefits, NSBI rebates back a percentage.
The payroll rebate agreement includes performance targets that a company must achieve in order to receive the rebate, including:
- Number of new positions created
- Average annual salary
We prefer this arrangement because no rebate money is paid unless and until a company first meets employment and salary targets. This guarantees that we have a positive return on investment (ROI). In other words, Nova Scotia gets paid first.
Who is eligible for a payroll rebate?
Nova Scotia Business Inc. supports companies in knowledge-based industries that have a high probability of sustainable growth. We focus our efforts on three targeted sectors: financial services and insurance, information technology, and defense, security, and aerospace. This helps make sure that Nova Scotians aren’t just getting jobs, they’re getting good jobs.
We invest in companies that are profitable, with a strong management team and a proven track record for success. In most cases, companies must also agree to create at least 20 full-time positions in Nova Scotia.
What is a payroll rebate?
A payroll rebate is an incentive that can be used to attract companies to Nova Scotia and to incent local companies to grow and create jobs here instead of somewhere else.
Why do you have payroll rebates?
They are used to create new jobs in Nova Scotia. They are helpful in competing with other locations around the world that also want to attract companies and create jobs.
How do they work?
When we sign a payroll rebate agreement, the company only receives a rebate payment after it has created the jobs in Nova Scotia and those job numbers have been confirmed. The amount the company receives depends on the amount of money it has spent on payroll for these new jobs. For every dollar a company spends on the new jobs, it receives between five and ten cents back.
How do you know how many jobs a company created?
When a company submits a rebate claim, it must send NSBI an audited report that confirms the number of jobs it created that year.
Why do you always say the maximum number of jobs?
Companies forecast their potential job creation growth and we incent up to an agreed maximum. We must tell the public how much we could spend in total if the agreed maximum was met, so we say what that maximum number of jobs could be.
Why do companies not always reach the maximum number of jobs?
Some companies reach the maximum job numbers and some do not. There are many business and economic factors that affect a company and its plans along the way.
Why does NSBI say that the province makes money when you are paying a company to create jobs?
Payroll rebates are designed in a way that the tax revenue generated for the province and taxpayers by the new jobs in Nova Scotia is always more than the amount spent on rebates.
Are there any other benefits to payroll rebates?
Yes. Payroll rebates not only help create new jobs in Nova Scotia, they help create new jobs for our university and college graduates so they can stay and work here instead of going elsewhere to find jobs. And when a company from elsewhere chooses Nova Scotia as a place to invest and create jobs they bring and transfer new skills, knowledge, and training to our workforce.