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Recover Overpaid CPP/EI Premiums

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Canada Pension Plan (CPP) and Employment Insurance (EI) -> Recovering overpayments of CPP or EI

How to Recover Overpayments of CPP Contributions or EI Premiums

If you deduct excessive Canada Pension Plan (CPP) contributions or Employment Insurance (EI) premiums from employees, this means you have also overpaid the employer portion of these costs.

In order to remedy this, for overpayments in the current calendar year, you can reduce your current year remittances by the total amount overpaid (including employer portion), and refunding to employees the excess that you have collected from them.

For overpayments in a prior calendar year, you can apply for a refund (within time limits) by completing the Canada Revenue Agency (CRA) form PD24 - Application for a refund of overdeducted CPP contributions or EI premiums.

The following time limits apply for filing the application for a refund:

bullet for CPP contributions, no later than four years from the end of the year in which the overpayment occurred
bullet for EI premiums, no later than three years from the end of the year in which the overpayment occurred
bulletfor overpayments refundable due to a decision by the Minister of National Revenue or by the court, no later than 30 days after the decision is communicated to you or the employee.

When the employer applies for a refund using form PD24, only the employer portion of the EI premiums or CPP contributions are refunded.  If the employee has also overpaid, the employer must issue an amended T4 for the applicable taxation years.  The amended T4 will show the revised amount of insurable or pensionable earnings (zero if appropriate), and the actual amount of premiums or contributions paid by the employee.  The employee will then have to adjust their previously filed tax returns based on the revised T4, which will automatically trigger a refund of the overpaid EI premiums or CPP contributions.

Sometimes, wages are non-pensionable, which means CPP contributions are not payable on the earnings.  Some wages are non-insurable, which means EI premiums are not payable on the earnings.  If an overpayment is related to non-pensionable or non-insurable earnings, a ruling may be required from CRA.  To request a ruling, see their web page How to obtain a ruling for CPP and EI purposes.  A ruling must be requested no later than June 30th of the year following the year to which the ruling relates.

See our articles

bullet CPP and EI
bullet Employment insurance (EI) premiums are not payable on some wages
bullet How do I (an employee) get back overpaid CPP, QPP or EI premiums?

Related Legislation

Employment Insurance Act Part IV S. 95:  Insurable earnings and collection of premiums - Overpayments and Refunds

Canada Pension Plan - S. 38 - Refunds of Overpayments

 

Revised: January 05, 2016

 

 

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