Published | Categories : Income tax - individuals, RL slips, Source deductions and contributions

Repayment of Employment Income an Employer Paid by Mistake in a Previous Year

Employees generally have to repay employers the gross amount of any employment income received by mistake if they repay the amount in a different year than it was received. They also have to recover the excess income tax, Québec Pension Plan (QPP) contributions and Québec parental insurance plan (QPIP) premiums that were deducted from Revenu Québec.

However, effective January 15, 2019, employees can, under certain conditions, repay employers only the net amount of any employment income received by mistake (gross income they received by mistake minus source deductions), even if they repay the amount in a different year than it was received. In this situation, we will reimburse the employer, rather than the employee, any source deductions the employer made on the amount paid by mistake.

Note that employees can, under certain conditions, repay employers the net amount of any employment income received by mistake if they repay the amount in the same year it was received by mistake. For more information, see the Guide to Filing the RL-1 Slip: Employment and Other Income (RL-1.G-V).

Conditions

An employee can repay an employer the net amount of any employment income received by mistake if the following conditions are met:

  • The employment income was received by mistake because of a clerical, administrative or system error.
  • The employment income was received by mistake after 2015.
  • The employer has not yet filed an RL-1 slip for the employee showing the employee's actual employment income (the gross income paid in the year minus the gross income paid by mistake).
  • The employee has repaid the net amount or made an arrangement with the employer to repay the amount by December 31 of the third year after the year in which the employment income was received by mistake.

If these conditions are not met, the employee has to repay the employer the gross amount of any employment income the employee received by mistake in a previous year. For more information, see the RL-1.G-V guide.

Calculating the net amount of employment income paid by mistake in a previous year

The net amount is equal to the employment income paid by mistake in a previous year, minus:

  • Québec income tax withheld on the income paid by mistake (if the employer has made an election);
  • QPP contributions deducted from the income paid by mistake (if the employer has made an election);
  • QPIP premiums deducted from the income paid by mistake (if the employer has made an election).

Employers must make a separate election for each type of deduction made under a Québec law, regardless of their election for each type of deduction under a federal law. They must make the election by December 31 of the third year after the year in which the employment income was paid by mistake.

Instructions for employers

To be refunded source deductions and employer contributions in a situation in which an employee repays the net amount of employment income received by mistake, employers have to:

  • send us an amended RL-1 slip and RL-1 summary for the year in which they paid the amount to the employee by mistake;
  • give the employee an amended RL-1 slip for the year in which they paid the amount by mistake.

The following information must be entered on the amended RL-1 slip: 

  • in the “Code du relevé” box, the letter A;
  • in the “No du dernier relevé transmis” box, the number shown in the upper right-hand corner of the slip being amended;
  • in box A, the actual employment income (the employment income paid in the year, minus the gross income paid by mistake);
  • in boxes G and I, the actual pensionable and eligible salary or wages (that is, the pensionable and eligible salary or wages paid for the year, minus the gross income paid by mistake if this income was subject to QPP contributions and QPIP premiums);
  • in boxes B and H, the total QPP contributions and QPIP premiums withheld at source during the year (including the amounts withheld from the employment income paid by mistake if this income was subject to QPP contributions and QPIP premiums), minus the amounts withheld from the employment income paid by mistake if this income was subject to QPP contributions and QPIP premiums and the employer made the election to be refunded an amount equal to the net income;
  • in box E, the total Québec income tax withheld at source during the year (including the income tax withheld on the employment income paid by mistake), minus the income tax withheld on the employment income paid by mistake if the employer made an election to be refunded an amount equal to the net income;
  • in the other boxes, the amounts from RL-1 slip that has already been filed;
  • the word “Modifié” on copy 2 of the RL-1 slip given to the employee and copy 1 of the RL-1 slip filed with us (if the slip is filed on paper).

Instructions for employees

An employee who repays an employer the net amount of employment income received by mistake in a previous year does not have to recover the excess income tax, QPP contributions and QPIP premiums deducted from Revenu Québec, if the employer made an election to that effect. The employee will have to complete form TP-1.R-V, Request for an Adjustment to an Income Tax Return, to change the income tax return already filed.

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