EI Insurable Earnings

EI Insurable Earnings calculated by our system ( Simply Accounting 2012 Premium ) is always higher than actual salary. Due to this issue CRA claim that our EI and CPP deductions are lower than required. Payroll deductions are calculated using CRA online payroll deductions calculator. We have consulted an accountant regarding this issue. She advised that Insurable Earnings cannot be higher than actual salary. Has anyone encounter such issue ?

Thanks

AK. 

 

  • Yes, it happens quite a lot.  Basically you have decided to do your payroll manually so you must do ALL your payroll manually, including making sure the EI and CPP Pensionable Earnings are accurate on the T4 and RL-1 Reporting tab of the employee ledger before you cut T4's and send the T4 Summary to the CRA.

    I believe the reason it is happening is because Simply calculates Insurable earnings from the amounts entered when in manual mode, not from the Gross on the cheque.  So there are often times when the totals at the end of the year do not match when people post manually.  Don't forget there are maximums as well that you will have to honour manually.

    In manual mode, the only thing that seems to be fully automatic is the calculation of the company amounts owing for EI and CPP at the current time.

  • Thank you for the explanation. We are a small company of three people and it does not make sense using Sage payroll service. In my opinion regardless whether payroll deductions are calculated manually (on CRA site) or using Sage payroll system, Ensurable Earnings should be calculated by the system correctly. As far as I know the the software is certified and I cannot believe the issue is not being addressed.

    In any case, just to clarify what you have explaned. There is nothing wrong with recalculating Ensurable Earnings manually on monthly basis and report manually calculated amounts on T4's..

    Greatly appreciate your help.

    Thank you. 

  • I am more inclined to report the correct numbers to the CRA.  If the calculated numbers in the program are incorrect, I change them.  Because the Ensurable Earnings do not affect the books themselves, I do it before I cut T4's, not monthly.