Repayment of Employment Income Paid by Mistake
If you paid employment income by mistake to an employee who was not owed that income, the employee must generally repay you an amount equal to the gross income paid by mistake and recover any income tax, Québec Pension Plan (QPP) contributions and Québec parental insurance plan (QPIP) premiums withheld on that income from us. In this situation, you can recover any employer contributions you overpaid by making a written request to us within four years after the end of the year in which the overpayment was made.
Under certain conditions, however, an employee may repay you an amount equal to the net income (amount equal to the gross income paid by mistake minus source deductions). In this situation, you will be able to recover any source deductions you overpaid by:
- subtracting the source deductions related to the employment income paid by mistake from your periodic remittances made using the Remittance of Source Deductions and Employer Contributions (form TPZ-1015.R.14.1-V, TPZ-1015.R.14.2-V, TPZ-1015.R.14.3-V or TPZ-1015.R.14.4-V, according to your remittance frequency), if the employee repays you the income in the year it was paid; or
- filing an amended RL-1 slip and an amended RL-1 summary for the year in which the employment income was paid to the employee by mistake, if the employee repays you employment income paid by mistake in a previous year.
An employee can repay an amount equal to the net income you paid by mistake in the year the amount was paid, if the following conditions are met:
- The employment income was paid because of a clerical, administrative or system error.
- You subtracted the source deductions and employer contributions related to the employment income paid by mistake from your periodic remittances made using the Remittance of Source Deductions and Employer Contributions (form TPZ-1015.R.14.1-V, TPZ-1015.R.14.2-V, TPZ-1015.R.14.3-V or TPZ-1015.R.14.4-V, according to your remittance frequency) for a period ending on or before December 31 of the taxation year in which that income was paid.
- The employee repaid an amount equal to the net income, or entered into an arrangement with you to repay the amount, by December 31 of the taxation year in which the employment income was paid by mistake.
An employee can repay an amount equal to the net income you paid by mistake in a previous year, if the following conditions are met:
- The employment income was paid because of a clerical, administrative or system error.
- The employment income was paid by mistake after 2015.
- You have not yet filed an RL-1 slip for the employee showing the employee's actual employment income (gross employment income paid in the year minus gross income paid by mistake).
- The amount equal to the net income is repaid by the employee, or an arrangement to repay the amount has been made between you and the employee, by December 31 of the third year after the year in which the employment income was paid by mistake.
Calculating net income
If an employee repays you employment income you paid by mistake in the year it was paid, the net income is equal to the gross employment income paid by mistake minus:
- the Québec income tax withheld from the income paid by mistake;
- the QPP contribution withheld from the income paid by mistake; and
- the QPIP premium withheld from the income paid by mistake.
If an employee repays you employment income you paid by mistake in a previous year, the net income is equal to the gross employment income paid by mistake minus:
- the Québec income tax withheld from the income paid by mistake (if you have made an election);
- the QPP contribution withheld from the income paid by mistake (if you have made an election); and
- the QPIP premium withheld from the income paid by mistake (if you have made an election).
You must, in addition to the elections you make under federal legislation, make a separate election for each type of deduction made under Québec legislation. The elections must be made by December 31 of the third year after the year in which the employment income was paid by mistake.
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Box A |
Enter the actual employment income, that is, the employment income paid during the year minus the gross income paid by mistake. |
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Box B |
Enter the total QPP contributions withheld during the year (including the amounts withheld from the gross employment income paid by mistake that was subject to QPP contributions), minus the QPP contributions withheld from the gross employment income paid by mistake that was subject to QPP contributions if the employee repaid an amount equal to the net income. |
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Box E |
Enter the total Québec income tax withheld during the year (including the income tax withheld on the gross employment income paid by mistake), minus the income tax withheld on the gross employment income paid by mistake if the employee repaid an amount equal to the net income. |
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Box G |
Enter the actual pensionable salary or wages under the QPP, that is, the pensionable salary or wages under the QPP for the year minus the gross income paid by mistake that was subject to QPP contributions. |
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Box H |
Enter the total QPIP premiums withheld during the year (including the QPIP premiums withheld from the gross employment income paid by mistake that was subject to QPIP premiums), minus the QPIP premiums withheld from the gross employment income paid by mistake that was subject to QPIP premiums if the employee repaid an amount equal to the net income. |
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Box I |
Enter the actual eligible salary or wages under the QPIP, that is, the eligible salary or wages under the QPIP for the year minus the gross employment income paid by mistake that was subject to QPIP premiums. |
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Other boxes and additional information |
Where applicable, enter in the other boxes of the RL-1 slip the amounts calculated according to the instructions given under How to Complete the RL-1 Slip (Box by Box Instructions). Also enter any additional information. |
The employment income that you paid by mistake and that the employee subsequently repays you does not constitute income for the year in which the employee received it.
If, at the time the employee repays you, you have already filed an RL-1 slip that includes the employment income paid by mistake, you must file an amended RL-1 slip for that year.