Personal Finance

Paying into EI and CPP after limit reached

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  • Jan 24th, 2011 11:30 pm
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[OP]
Sr. Member
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Jun 18, 2008
849 posts
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Paying into EI and CPP after limit reached

In my current job I usually pay off my EI and CPP by the end of the summer. With one job it is easy to track because on my paystub it shows exactly how much I have paid into both. When I reach my maximum contribution amount for both, they stop deducting it from my pay.

However, I will be leaving my job for another one soon and I am wondering how the new company is going to know how much I've already paid into CPP and EI for this year before I started working for them? I dont want to keep paying it after I have already reached my maximum (if they dont add on what I paid with my previous employer).

Anyone know how this is going to work?
12 replies
Deal Addict
Dec 28, 2008
1318 posts
122 upvotes
Toronto
You'll get your over payment back when you file your taxes.
Deal Addict
Feb 5, 2009
2069 posts
272 upvotes
Newmarket
To further expand on the answer each company is obliged to deduct EI and CPP, it often happens if you have more than one employer in the year. Throught the year you will over contribute but you will get your over contribution back when filing personal income tax, the employers however won't get anything back.
Deal Addict
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Jan 27, 2007
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You will pay CPP and EI as if this is a new postion and get any overpayment you make back when you file your 2011 tax return.

Your new employer, on the other hand, does not get their overcontribution back.
Deal Addict
Oct 9, 2005
1789 posts
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On a related note, if you made more than the personal exemption amounts for the year before you switch employers, you will need to keep some money aside for additional tax (unless you file federal and provincial TD1s showing your personal exemption being used up). Your second employer will assume you haven't used your personal exemption yet and will take off less income tax on each pay cheque.

TD1 forms: http://www.cra-arc.gc.ca/formspubs/frms/td1-eng.html
Member
Dec 1, 2010
235 posts
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guessaaa wrote:
Jan 22nd, 2011 5:46 pm
On a related note, if you made more than the personal exemption amounts for the year before you switch employers, you will need to keep some money aside for additional tax (unless you file federal and provincial TD1s showing your personal exemption being used up). Your second employer will assume you haven't used your personal exemption yet and will take off less income tax on each pay cheque.

TD1 forms: http://www.cra-arc.gc.ca/formspubs/frms/td1-eng.html

Yeah, give your employer a TD1 with "0" marked in Box 13 and check the "multiple employers" box on page 2. I did this myself when I had two employers.
Deal Fanatic
Feb 21, 2006
5148 posts
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Direct from the CRA: each new employer you have in the year is required to pay up to the maximum EI and CPP employer contribution for you, regardless of how much previous employers have already paid. The employers don't get anything back. This is a government "cheat" built into the tax regulations - you can't draw EI or CPP more than once, but the employers can be made to pay multiple contributions for you in this circumstance.
Sr. Member
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Jan 1, 2009
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Vancouver
Aske001 wrote:
Jan 23rd, 2011 1:19 am
Direct from the CRA: each new employer you have in the year is required to pay up to the maximum EI and CPP employer contribution for you, regardless of how much previous employers have already paid. The employers don't get anything back. This is a government "cheat" built into the tax regulations - you can't draw EI or CPP more than once, but the employers can be made to pay multiple contributions for you in this circumstance.

Actually, employers file a PD24 to get their share of over payments of CPP and EI refunded....
Deal Fanatic
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Dec 25, 2003
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Cypherus21 wrote:
Jan 23rd, 2011 3:28 am
Actually, employers file a PD24 to get their share of over payments of CPP and EI refunded....

Of course 99% of the time employers don't know how much EI/CPP a new employee has already paid that year.
General Radek had some good ideas.
Deal Addict
Feb 5, 2009
2069 posts
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Newmarket
Cypherus21 wrote:
Jan 23rd, 2011 3:28 am
Actually, employers file a PD24 to get their share of over payments of CPP and EI refunded....
Having multiple employers is not one of the reason to file the form. Only reasons listed qualify.
Penalty Box
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Jan 7, 2011
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KW
Homerhomer wrote:
Jan 23rd, 2011 8:19 am
Having multiple employers is not one of the reason to file the form. Only reasons listed qualify.

Was just going to say that can't be right - every employer in the course of a year would claim that the over contribution was theirs.

Here is the question I have, if your a private sector employer with a dozen employees that average 80k+ a year and heading into a recession that cuts your volumes, do you:

- Cut back hours, keep everyone.

- Layoffs.

Strikes me the first option would be preferred by most everyone, EI pays little anymore so 25ish hour weeks are way better in this income bracket, you don't have to find new people when things rebound etc.

But if you do the later, all your remaining employees will be roughly 7.5% cheaper by mid year, if your something like a contractor that may very well be the difference on being low bid, if you don't do it and your competitors do - then no one is working.

Am I missing something??, just strikes me as a ludicrous system - like something a civil servant would concoct.

Oh and who REALLY pays the employer contribution?
Deal Fanatic
Feb 21, 2006
5148 posts
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Cypherus21 wrote:
Jan 23rd, 2011 3:28 am
Actually, employers file a PD24 to get their share of over payments of CPP and EI refunded....
That works if one employer has overpaid, but "Another employer already paid the maximum" is definitely not one of the allowed reasons for claiming a refund. Already explored this with the CRA.

Also if the employee has already paid the max elsewhere earlier in the year, the employer still has to collect from them again, remit to the CRA, then have the employee claim it back from the CRA when they file their tax return. Good way to keep a bunch of government drones employed.
Deal Addict
Dec 28, 2006
2374 posts
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Saskatoon
Aske001 wrote:
Jan 23rd, 2011 10:36 am
Also if the employee has already paid the max elsewhere earlier in the year, the employer still has to collect from them again, remit to the CRA, then have the employee claim it back from the CRA when they file their tax return. Good way to keep a bunch of government drones employed.


I'm guessing that the computer(s) that calculate this and the printer that prints the employee's refund cheque work reasonably cheap.
Conquistador wrote:
May 20th, 2010 2:57 pm
One other thing you should know for future reference. If it is on the subject of taxes, listen to ghostryder. He knows his stuff.
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