If you work two jobs in a year, both of your employers are
likely deducting CPP and EI from your pay cheques, which sometimes result in
you, the employee, over-contributing to CPP and EI during the year. Typically,
your accountant will calculate the overpayment and reduce your personal income
tax owing by this amount.
This can be done in prior years BUT only to a maximum of
four years for CPP and three years for EI. This means that if you are behind on
filing your tax returns more than 3-4 years, it is possible that the Canada
Revenue Agency will deny your over-payment and not reduce your taxes payable by
this amount.
The amounts of overpayment are usually not large, but keep
in mind that penalties and interest are charged on the overdue taxes. This
means that the denial of the Canada Pension Plan and Employment Insurance
amounts will result in more tax, more penalties and more interest. Over a
number of years, the small overpayments that were denied have grown,
essentially on a daily basis as the CRA computes compound interest daily.
So do yourself a favour and file those tax returns. Even if
you think you have refunds, why take the risk of losing out on potential CPP
and EI over-payments.
Feel free to contact our firm to help you get up to date
with your tax filings.
No comments:
Post a Comment