CPP Overpayment

Sage 50 Accounting - Canadian Edition

Sage 50 Accounting - Canadian Edition
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CPP Overpayment

  • What happens when there is a CPP overpayment?  I know if not adjusted the employees will get their overpayment back on their tax return, but what about the employer's overpayment?  Does CRA credit the payroll account for this?

    This feels like a stupid question! 

  • If you're basing said overpayment(s) on S/Accounting's PIER review report, don't. The report is inaccurate and unreliable.

    The CRA doesn't return or credit back the employer portion of a CPP overpayment automatically, that's for sure. As for a pleading phonecall to them, I don't know ....

    Dave

  •  I actually opened the payroll detail in Excel and did the calculation myself.  There were overpayments by the employees.  I then contacted CRA to find out how the employer goes about getting their overpayment back.  I was told to report the CPP deductions on the T4s for the employees that were actually deducted and then on the T4 Summary to report what should have been deducted.  He said the difference for the overpayment will be credited to the payroll account and to deduct this amount of the next remittance.  He also told me to include a note explaining why there were overpayments.  It will be interesting to see how this works out in the end.  Seems to easy to actually get a refund from CRA!

  • Wow! Definitely too easy! We had a similiar situation several years ago when we discovered an over-remittence error after generating our T4's. It was an obvious, black-and-white mistake. Even CRA agreed at the outset we were due a refund. Yet it took months and months and a number of follow-up phone calls before it was finally credited back to our account. (It was during this process that I learned that the guy behind one desk might not necessarily provide the same answers and information as the guy behind the desk next to him. I'll leave it at that.) As for reducing our remittance, we weren't allowed to apply the credit until after we received written notice from CRA.

    One question: How are you supposed to attach a note re overpayments to your electronically-filed report?

    Dave

  •  Hi there:  The Simply payroll program WILL NOT overdeduct CPP from employees.  The probability would be that there are some circumstances where the system underdeducts but NEVER overdeducts.   How did you do the calculations in Excel to figure out that there were overdeductions?   You cannot just take the gross earnings for every employee and subtract the $3,500.00 base amount and multiply by .0495.     If any employees did not work the full twelve months of the year, then you don't just deduct $3,500.00 from their gross.  You need to figure out each payday what the proportionate amount of the $3,500.00 applied to that pay period.     If you run the PIER report in Simply do you get the same overdeductions as you figured out in Excel?   The PIER report is incorrect if there are any employees who did not work the full year.   Rita Deering

     

  • Adding to Rita's comment, you also have to factor employee age in your Excel-based calculation. CPP deductions don't start until the month following an employee's 18th birthday.

    Dave

  •  I was helping out a client and was working from her backup.  Because I don't have the SimplyCare, it would not let me see the PIER report.  I asked the client for their payroll ID and she did not know it.  So what would you do?  Take that the info in Simply is correct?

  • Assuming your client set up/updated the payroll module and her employee information correctly, I would say, Yes, SA's data can be considered reliable. Along with others on the forum, I've personally confirmed that it calculates Source deductions with reasonable accuracy. It just can't do likewise with its PIER report.

    Dave

  •  Hi again:  You did not say how you checked the CPP deductions in Excel.  If you did just deduct $3,500.00 off the gross for each employee and then multiply to get the CPP amount, then your calculations would definitely not be correct, particularly if there were employees not employed for the full year.

    You say you were working from the client's backup.  If you open Simply, go up to Reports, Payroll, Employee, Detail, choose Jan. 1, 2009 to Dec. 31, 2009 for your date range and bring up that report and print it, you will be able to see from that report if each pay period was correctly deducted based on the number of pay periods selected, etc.  If you do not want to spend the time for this, you can pretty safely assume that the Simply deductions are correct as long as the client was using the current deduction tables throughout the year as Dave mentioned previously. 

    The circumstances where the program may actually underdeduct are few, so unless you know the circumstances of every paycheque issued you would not be able to determine that.   I would trust Simply and if there turns out to be any under deducted employees, that will have to be dealt with later.   Rita Deering

     

  •  I had the same problem when I ran my PIER report, and found in the Simply help section that there was an error in a couple of the early releases that would overdeduct CPP. When I called CRA, I was told that if I couldn't adjust the amounts before my T4's were sent out then I could submit a form PD24 called 'Application for a Refund of Overdeducted CPP Contributions' for each employee. I know that if CPP is underdeducted CRA sends out a request for the money in short order, so I suppose if I'm in error they'll let me know quickly enough. The lady at CRA also said it happens quite frequently for employees who don't work all year.

  •  Hi Rita - this is an old post but I know I am missing something hoping you can help to confirm.  So for employees working less than a year (starting in the middle or quit in the middle of the year), why can't we take their gross income minus $3500 x 0.0495?  Do you mean that if she starts on July 1st of the year, she is only allowed to exempt 1/2 of $3500?

  • Simply deducts the right amount each pay period. The pier report is wrong and always has been. Do not use it. If that employee was to work for other employers during the year they can't all deduct the 3,500, so trust simply is doing the right thing each pay period. Rita (typed by her daughter Kim)

  • She actually didnt' work for the whole year until I hired her in August 2011.  And I don't use the PIER report.  Simply auto deduct and I remit using the Remittance Summary.  Maybe her exemption is only for August-December which is only 5/12 months which is 5/12x$3500? I always thought she would be exempted the whole $3500 from her gross income, maybe I am wrong...