Civilian Employees: Overpayments and their effect on personal tax returns (2016 or prior)

July 20, 2020 – Defence Stories

Tax legislation allows employees to repay their employer the net amount of an overpayment received in a previous year, providing the overpayment was a result of a clerical, administrative or system error and the overpayment is recorded in Phoenix no later than three years after the end of the year in which the employee was overpaid.

This means that overpayments resulting from a payment effective in or prior to 2016, and recorded in Phoenix after December 31, 2019, will not adjust the following deductions at source:

• Federal Income Tax (CIT)
• Québec Provincial Income Tax (QIT)
• Employment Insurance (EI)
• Québec Parental Insurance Plan (QPIP)
• Canada Pension Plan (CPP)
• Québec Pension Plan

As a result, you will be required to repay the gross amount of the overpayment. Any refund of deductions will be issued by the Canada Revenue Agency (CRA), and Revenu Québec if applicable, when your personal tax return is reassessed. Once the overpayment amount is recorded in Phoenix, your employer will issue an amended tax slip showing the adjusted earnings and the full-source deductions.

When CRA and Revenu Québec receive amended tax slips more than three years after the date of the original notice of assessment, current income tax legislation prevents both revenue agencies from proactively reassessing your personal income tax returns.

In these situations, you must request a reassessment of your 2016 or prior personal tax return by contacting the applicable revenue agency.

Visit overpayments and options to repay them to find out more about overpayments. Refer to the tax slips amendments schedule to know when amended tax slips will be available and visit the accessing and managing your tax slips web page for more information about amended tax slips and re-filing a tax return.

Refer to the communication entitled Time limitation for proactive reassessment of 2016 income tax returns due to amended tax slips distributed January 9, 2020 for more information.

If you have any questions, please contact PSPC’s Client Contact Centre at 1-855-686-4729.