Call for Comments — Draft Tax Legislative Proposals Regarding Salary Overpayments, Including Phoenix Pay System — January 16, 2019

Call for Comments — Draft Tax Legislative Proposals Regarding Salary Overpayments, Including Phoenix Pay System

 January 16, 2019

OTTAWA: Jim Eglinski, Member of Parliament for Yellowhead, is pleased to advise constituents that the Department of Finance is releasing draft legislative proposals that would—under certain conditions—permit an affected employee to repay to their employer only the net amount of the overpayment received in a previous year, rather than the gross amount (including taxes, CPP, and EI).

Under the proposed legislation:

  • The CRA would be able to refund directly to the employer the income tax, CPP, and EI withheld on an overpayment that occurred through a system, administrative, or clerical error.
  • Effectively extend the existing rules for overpayments repaid within the same year to overpayments repaid within three calendar years after that year (or where arrangements have been made within that three-year period to make such a repayment).
  • Public and private sector employers could elect to apply these new rules for any overpayment paid after 2015 due to a system, administrative, or clerical error, as long as they have not previously issued a T4 correcting for this overpayment.

For these new rules to apply, the employee must have repaid their employer (or made arrangements to repay) within three years following the end of the year in which the overpayment took place.  Where these conditions are not met, the current rules would continue to apply.

Canadians are invited to provide comments on the draft legislative proposals by February 15, 2019.

 “I encourage you to take the time to comment on the draft tax legislation proposals.  Your input will ensure this issue is finally rectified,” concluded MP Eglinski.

Please send your comments to fin.overpayments.2019.trop-payes.fin@canada.ca  or by mail to:

Tax Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5

For more information visit:  https://www.fin.gc.ca/drleg-apl/2019/phoenix-phenix-l-eng.asp

 

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