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Canada: Pension plan, employment insurance refund deadline, 31 December 2019

Canada: Pension plan, employment insurance refund

Employers have until 31 December 2019 to file refund applications for overpayments of Canada pension plan and employment insurance. Specifically, eligible employers that overpaid Canada pension plan contributions in 2015, or that overpaid employment insurance premiums in 2016, must file a refund application by 31 December 2019 for refunds of these amounts.

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Certain employers may have overpaid contributions when they remitted amounts related to certain payments and benefits that are excluded from the calculations of Canada pension plan contributions and employment insurance premiums, or amounts that exceed the maximum insurable earnings or pensionable earnings.

Summary

In general, employers that have overpaid amounts related to the current year need to adjust their payroll records, and not include these amounts in the refund application for overpayments of Canada pension plan and employment insurance. For overpayments related to prior calendar years, an employer can file a refund application to the Canada Revenue Agency (CRA) within the following time frame:

  • Canada pension plan contributions — No later than four years from the end of the year in which the overpayment occurred
  • Employment insurance premiums — No later than three years from the end of the year in which the overpayment occurred
  • Overpayments refundable due to a CRA or court decision — No later than 30 days after the decision is communicated to the employer or the employee.

Employers are to include only their own portion of overpaid employment insurance premiums or Canada pension plan contributions in a refund application (and not the employees' portion). In certain circumstances when an employee has also overpaid employment insurance premiums or Canada pension plan contributions, the employer may have to issue an amended T4 to the employee for the applicable tax years. When the employer issues an amended T4, the employee will then have to adjust the previously filed tax returns based on the revised T4, which will then trigger a refund of the overpaid employment insurance premiums or Canada pension plan contributions.


Read a November 2019 report prepared by the KPMG member firm in Canada

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