The maximum for 2006 was $42,100.  Is it possible that the payroll update did not get installed for the 2007 calendar year until after July 1st? That is the one way that I can see that Simply would not deduct the correct amount.  If your client surpassed the $43,700 by the end of June and the 2007 tax tables were installed after that max was reached, Simply will not deduct any more premium.  It is the max that Simply determines with each payroll and then stops taking tax off.  I have seen owners that will take a large bonus during the first part of the year but insist that no CPP comes off;  the maximum is surpassed and then if the bookeeper does not reset the pensionable earnings, they end up with a shortfall at the end of the year.

The maximum for 2007, as you state is, $43,700 and if the employee made in excess of that amount it is $43,700 that should appear on the T4.  You may want to send the extra amount to CRA with a letter of explanation.  Otherwise you will likely receive a PIER Review sometime in April or May.

Thanks Brent. My client who is also owner, drew a lot more than 43800 maximum. his contribution as shows on T4 is also maximum allowable of $1989.90. I am wondering how did Simply Accounting calculate this maximum when his drawing had not reached maximum of $ 43700. If my payroll was not up to date, then it would not allow to contribute this maximum. The maximum allowable contributin in 2006 was below 1989.90. Therefore, I see inconsistancy between maximum allowable contribution and maximum pensionable income.

I would appreciate your comment on this.

Noor

I was not aware that the correct contribution had been achieved from your first post. 

I have tried in the past to replicate the pensionable earnings issues but have never been able to get these issues to occur consistently enough to pinpoint any one precise cause. Sometimes an adjusted paycheque will cause problems as well as the bonus with no CPP that I mentioned earlier.

If you check out Knowledge Base article 16741, there are a few more reasons listed there as to why this may occur.

Brent

Thanks again. Yes the was a reversal of one of the cheques. I believe that is what caused this inconsistancy.  I will use the maximum pensionable earnings on his tax return and ignore the figures shown on the T4.

Thanks again.

Noor:

Do NOT ignore the figures shown on the T4 if you are preparing a tax return.

A copy of the T4 has been provided to CRA.

If you enter a different amount on the tax return, your client could have a problem this fall. CRA reviews tax returns and matches them to the information they receive from all T slips and other information.

If the T4 slip is wrong, it needs to be amended and re-issued.

A copy of the amended T4 slip needs to be provided to CRA. If the changed T4 slip makes any changes to the T4 Summary this also needs to be amended and a revised Summary provide to CRA.

Don't start creating numbers to put on a tax return. That can cause all sorts of problems down the road.

I prepare somewhere around 600 personal tax returns and 100 corporate tax returns each year and would never prepare one where the figures I was given were incorrect. It is not at all unusual for accountants to ask for corrections when we find errors.

I would appreciate if someone can guide me on theprocess of ammending the T4 and submitting it to CRA. I need to ammend the pensionable earnings only. My client has contributed the maximum and the employer share of the maximum has been remitted too. All I need to do is ammend the T4 and submit it to CRA. How do I amend the T4 on simply accountong. And can I submit the amendment to CRA online?

I appreciate any help on this matter.