Updated Checked by the Tax-Services.ca editorial team How we check
Payroll tax errors usually get fixed in the next pay run, not in a scramble. If you took too much CPP or EI off an employee, the CRA credits it back and you can file for a refund. If you took too little, you recover it from later pay, a bit at a time. Which case you’re in decides everything.
Did you take off too much or too little?
Start there, because the two mistakes have different cures. Pull the pay records for the pay periods in question and compare what was deducted with what the payroll tables call for. The payroll deductions calculator gives a quick check for one pay period, and the take-home pay calculator shows the same thing from the employee’s side.
Write down the periods, the amounts and the cause. A wrong tax table, a missed exemption and a typo in a rate each leave a different trail, and you’ll want the trail clear before you talk to the employee or the CRA.
What are the steps once you’ve found the error?
- List each affected pay period with what was deducted and what should have been.
- Work out whether it’s over or under for each deduction: CPP, EI and income tax are separate.
- Check whether the T4 for that year has been filed yet.
- Pick the fix below that matches, and write down the date you made it.
- Tell the employee in plain words what happened and what changes.
Whether the T4 has already gone in matters a lot, since the CRA treats it differently before and after filing. The CRA’s page on correcting deduction errors after filing sets out each case.
How do you fix overdeducted CPP or EI?
Show the total deducted, overpayment included, and the correct earnings on the employee’s T4. The CRA then credits the excess to the employee. To get your own share back, the employer applies with form PD24, online through a CRA account or by mail.
| Item | Time limit to ask for the refund |
|---|---|
| Overdeducted CPP | No later than 4 years from the end of the year of the overpayment |
| Overdeducted EI | No later than 3 years from the end of the year of the overpayment |
So an EI slip-up from last year has time. One from four years ago probably doesn’t.
How do you recover tax you didn’t deduct?
For CPP or EI you missed, you deduct the shortfall from the employee’s future pay, up to the normal deduction amount in each period, within a 12 month window. The CRA says you can’t recover an amount that has been outstanding for more than 12 months. You don’t put the recovered amount on the current year’s T4, and you may need to amend the T4 for the year of the error.
Here’s a case with real numbers. The calculator shows an Ontario employee paid $2,884.62 every two weeks having $163.33 of CPP and $43.20 of EI taken off, with $2,189.46 left in net pay. Say CPP was left off for three pay periods by mistake. The shortfall is 3 x $163.33, or $489.99. Under the CRA method you’d take an extra amount up to that normal $163.33 from each of the next three cheques. That cuts take-home pay to about $2,026 for three periods, so tell the employee in advance.
Taking the whole $489.99 from one cheque would drop that paycheque to about $1,699, and the rule limits each period’s recovery to the normal amount anyway. Spreading it is kinder and it’s the method the CRA describes.
The example ignores income tax on those periods, which isn’t on the CRA page used for this case.
What if you paid someone too much salary?
This is a separate problem, and it splits by how the money comes back. If the employee repays the net amount, which the CRA limits to clerical or system errors within three years, you amend the T4 to reduce income, CPP, EI and tax by the overpayment, and you get the remitted amounts credited. If they repay the gross amount, in every other case, you amend the T4 to reduce income and earnings only. Then ask for the employer CPP and EI refund on PD24.
Whichever route it is, the CRA says there’s generally no time limit to amend T4 slips. Fix it soon anyway, because the employee needs the right slip for their own return. Your remittance calendar matters too. The payroll remittance calculator shows the amount due, and an amended slip can reduce a later remittance.
Mistakes that cost more than the original error
The worst is doing nothing because the amount looks small. A shortfall that nobody recovers doesn’t go away, and it gets harder to explain the longer it sits. The second worst is fixing the pay run but not the T4, so the slip and the stub disagree. A third is recovering the whole shortfall from one cheque.
The employee’s side matters as well. If their slip changes, their return may change, and the tax refund calculator shows what a different slip does to a refund or balance.
How we checked the figures
The refund forms, time limits, 12 month recovery rule and T4 amendment steps come from the Canada Revenue Agency‘s page on correcting deduction errors after filing. The pay example comes from our payroll deductions calculator using 2026 data. Penalty amounts for late or wrong remittances weren’t confirmed on an official page, so this page gives none. Check the CRA page for your exact case before you amend anything.
Frequently asked questions
How do I get back CPP I overdeducted?
The employer applies on form PD24, online or by mail. The CRA sets 4 years from the end of the year of the overpayment for CPP and 3 years for EI.
Can I recover missed CPP from later paycheques?
Yes, up to the normal deduction amount per pay period, within a 12 month window, according to the CRA.
Do I have to amend the T4?
Often yes. The CRA says generally there is no time limit to amend T4 slips, and an amended slip lets the CRA credit your account.
What if the employee was paid too much?
It depends on whether they repay the net or the gross amount. Net repayment applies only to clerical or system errors within three years.
Are there penalties for remittance mistakes?
Probably in some cases, but we couldn't confirm penalty rates on a page we opened. Check the CRA page for your situation.
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