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How to Recover Overpayments of CPP Contributions or EI
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
The following time limits
apply for filing the application for a refund:
for CPP contributions, no later than four years from
the end of the year in which the overpayment occurred
for EI premiums, no later than three years from the end
of the year in which the overpayment occurred
for 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
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
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.