Question

What could cause an employee to have an over-contribution to the Canada Pension Plan or Employment Insurance?

Answer 1

What could cause an employee to have an over-contribution to the Canada Pension Plan or Employment Insurance?

Sometimes, an employee may pay too much Canada Pension Plan (CPP), Quebec Pension Plan (QPP), or Employment Insurance (EI) premiums during the year. Usually this is because the employee has changed jobs. When a new job is started, CPP/QPP and EI premiums are calculated without regard to premiums paid at the old job, so it is possible to pay more than the maximum annual amount.

Schedule 8 will be completed to calculate your CPP or QPP contributions if either:

    - you are a resident of Quebec and contributed only to QPP, or

    - you are a resident of another province/territory and contributed only to CPP.

Form RC381 will be completed to calculate your CPP or QPP contributions if either:

    - you are a resident of Quebec and contributed to CPP, or to both CPP and QPP, or

    - you are resident of another province/territory and contributed to QPP, or to both CPP and QPP.

All of the above is automatically done by tax software when you enter amounts from your T4 slips or RL-1 slips.

There may be a situation where the CPP or QPP contributions or EI premiums have been overpaid, even though the maximum amount of premium for the year was not paid. If you are filing your tax return manually, you will enter on lines 308 and 310 of schedule 1 the actual amounts of CPP or QPP and EI premiums paid.  It is not necessary to calculate the overpayment yourself. When Canada Revenue Agency (CRA) receives your tax return, it automatically calculates any overpayment and refunds it to you. If you use tax software to file your return, any overpayment should automatically be calculated, and entered on lines 448 for CPP and 450 for EI.