Proposed Legislative changes impacting overpayments
On January 15, 2019, the Government released proposed legislative changes that will generally allow employers who make an overpayment of salary in error to recover the income tax, CPP contributions, and EI premiums withheld and remitted on the overpayment from the CRA. This will allow employees to repay employers only the net amount instead of the gross amount as is currently required when the salary overpayment and repayment are made in different years.
What does this mean for you?
If you have been overpaid in a previous year, and the overpayment is not yet recorded in Phoenix your overpayment calculation may qualify under the new legislation.
If your situation qualifies under the proposed legislation and the above criteria, the income tax, EI and QPIP will be adjusted on your previous year salary overpayment once it is recorded in the Phoenix pay system.However, PSPC will not run the overpayment calculation process and amended tax slips for overpayment amounts reported for 2016, 2017 and 2018 until the legislation changes have been implemented in Phoenix.
Since the PSPC is not running the overpayment process, the compensation advisor will not be able to advise you of the amount of your overpayment until the legislation changes are implemented and PSPC runs the overpayment process in Phoenix. Amended tax slips will be issued after the proposed legislative measures have been implemented and the overpayment process is run in Phoenix.
If you are a resident of Quebec, please see Finance Quebec’s Information Bulletin 2019-1, Harmonization with news release 2019-004 of the Department of Finance Canada.