Make corrections before filing

It is the obligation of the taxpayer, the employer and the payee to report the income accurately. The employer can correct a reporting error.

You cannot change the nature of the income

 

The employer cannot change the nature of the income paid (for example, from salary to dividends). Depending on your situation, this is considered retroactive tax planning and is inaccurately changing the reporting of the income.

Current year corrections

 

You may need to correct the following deduction error or salary overpayment in the current tax year:

You under deducted CPP contributions or EI premiums (recovering)

If you discover that you have under deducted CPP or EI, you are responsible for remitting the balance due for both the employer's and employee's shares. If you do not remit the amount, you may receive a PIER review.

Learn more: Pensionable and insurable earnings review (PIER).

How to correct the error

You can recover the employee's contributions or premiums from later payments to the employee, under the following conditions:

  • The recovered contribution or premium can be equal to, but not more than, the amount that should have been deducted from each payment
  • You cannot recover a contribution or a premium amount that has been outstanding for more than 12 months
  • You cannot adjust the employee's income tax deduction to cover the CPP or EI shortfall

What if you cannot recover the deduction in the current tax year

If you should have made a deduction in a previous year and you recovered it through an additional deduction in the current year, do not report the recovered contributions or premiums on the current year's slip.

Learn more: Correct deduction errors after filing.

You over deducted CPP contributions or EI premiums (overpayment)

If you over deducted CPP or EI (for example, the maximum amount was exceeded, or the employee was not employed in pensionable/insurable employment) from an employee and you become aware of it in the current tax year:

  • Reimburse the employee the amount deducted in error and adjust your payroll records to reflect the reduced deduction
  • Use the resulting credit in the payroll account to reduce future remittance in the same tax year
  • Do not include the reimbursed amount on the T4 slip

What if you cannot reimburse the employee

If the over deduction cannot be reimbursed, you must report the total CPP or EI deductions and correct pensionable or insurable earnings on the employee's T4 slip.

The employee portion will be refunded when the employee files their personal income tax return.

Learn more: Correct deduction errors after filing.

How to request a refund for the employer's share

If the over deduction cannot be reimbursed, you can request a refund by sending a completed Form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums.

You can send the application with your information return or send it later within the following time limits:

  • CPP contributions

    No later than 4 years from the end of the year in which the overpayment occurred

  • EI premiums

    No later than 3 years from the end of the year in which the overpayment occurred

You under deducted or over deducted income tax

You may realize that the required amount of income tax was not deducted from amounts paid to your employee.

How to correct the error

If you have under deducted or over deducted income tax, you should advise your employee as soon as you know that the required amount of income tax was not deducted.

What if you already remitted (paid)

You must correct the error if you already remitted (paid).

Learn more on how to correct the error if you remitted more or less than you should have: Make corrections after you remit (pay).

What if you over deducted and you already filed the T4 slip

You do not need to file an amendment if you over deducted and you already filed the T4 slip.

The over deduction will be credited when the employee files their personal income tax return.

Prior year corrections

 

You may need to correct a deduction error or a salary overpayment in a previous tax year.

Learn more on how to correct a deduction error or a salary overpayment when you have already filed the information return: Correct deduction errors – Make corrections after filing.

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