2017-03-29 00:00:00PayrollEnglishCorrect an overpayment to an employee by addressing the repayment, writing a repayment letter, and notifying the CRA. Correct an...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/Business-Owner-Corrects-Overpayment-To-Employees-In-QuickBooks.jpgCorrecting Overpayment to Employees

Correcting Overpayment to Employees

1 min read

Mistakes happen when processing payroll. Fortunately, the Canada Revenue Agency offers clear instructions for correcting overpayment issues efficiently. Just remember that there are different rules you need to follow depending on the reason for overpayment. In most cases, overpayment problems can be resolved when you and your employee file your taxes. You should always include the overpayment amount, along with Canada Pension Plan contributions and Employment Insurance deductions, on the employee’s T4 slip even if he or she doesn’t repay you. Should your employee repay you, though, give the person a letter saying he or she repaid you, and note the reason for the overpayment. Your employee can use the letter to claim a deduction when filing his or her taxes. The CRA adjusts the employee’s CPP and EI contributions as needed. To get a refund for CPP contributions and EI premiums you might have overpaid on behalf of an employee, fill out Form PD24 and send it to the CRA. The agency credits your payroll account based on the information you provide. The CRA makes handling salary overpayments fairly straightforward. You may wish to consult the agency’s website or with a payroll specialist for tips on handling large-scale overpayment issues.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

How to Correct a Salary Overpayment With the CRA

If you accidentally overpay one of your employees, the Canada Revenue Agency…

Read more

What Is a Latent Defect?

A latent defect is a flaw in property you can’t easily spot…

Read more

Claim Saskatchewan Tax Refunds Within Four Years From Date of Overpayment

When businesses overpay provincial tax, they can usually claim a refund. In…

Read more