Have you ever received one of those Pensionable and Insurable Earnings Review (PIER) notices from the Canada Revenue Agency (CRA)?  If so, you might have experienced the bewilderment, irritation, and anxiety that many employers share.

You likely asked yourself — what is this thing?  And why am I receiving this notice to pay more Canada Pension Plan (CPP) or Employment Insurance (EI) remittances? Did I do something wrong? Or why did my payroll program get the remittance amounts wrong? 

It’s really not as bad as it might look at first.

Here’s how you can avoid a PIER assessment

WinTax has the solution to eliminate the possibility of a PIER assessment for your company this year.

Coming in mid-December 2023, WinTax Payroll Software will be issuing a year-end CPP and EI verification program. This program will check on each employee’s CPP and EI contributions after the final pay of 2023 and produce a report showing you any discrepancies.

 This new tool will help you identify and correct CPP and EI over and underpayments before you file your last 2023 payroll.  

No remittance error means no PIER Assessment!

Look for the email announcement from our support team in mid-December. We’ll be providing more information about how to use the new feature in the coming weeks.

Want to know more about PIER Assessments?  

In the meantime, we’ve prepared this guide to help you understand more about the Pier Assessments. We’ll explore what a PIER is, why it is important, and the common reasons behind the PIER assessment notices. We’ll also share valuable insights on how to steer clear of them during the busy tax season.

The first thing you need to know is that a PIER assessment is NOT a sign of wrongdoing. CRA routinely reviews employer remittance accounts to ensure accurate reporting and payments of CPP contributions and EI premiums.

What is a PIER?

Every year, the CRA reviews the information on the T4 slips to ensure that the required CPP and EI contributions match the information reported on the T4 slips. The PIER assessment report identifies potential discrepancies between these amounts, and it identifies CPP and EI shortfalls and overpayments for employee AND employer contributions.  

If your company receives a PIER assessment from the CRA, you must provide explanations for any discrepancies by the deadline stated in the PIER report. Keep in mind that the employer is accountable for remitting the entire outstanding balance—including the employee’s share. 

If you can’t clarify these deficiencies, or you don’t respond in time, then you will have to pay CRA’s assessed amounts for the employee and employer, along with any penalties and interest that CRA may assess

Why is the PIER important?

PIER assessments are important because these calculations form the basis for future CPP and EI payment entitlements for employees. This includes:

• CPP benefits when an employee retires becomes disabled, or passes away.
• EI benefits during periods of unemployment and employment leaves for maternity, parental, and adoption leaves.
• compassionate care leave when an employee needs time off to provide care or support to a critically ill or injured family member,
• leave without pay due to illness or other reasons.

Common Reasons for PIER Assessments and CPP/EI Errors:

Here are the most common situations that lead to CPP/EI errors and PIER assessments.

• Incorrect Birth Date or Age Eligibility:

Setting up an employee with an incorrect birth date or an age falling outside the eligible range (18 to 70 for CPP; varying for QPP) will signal the payroll calculator to not include CPP/QPP deductions or accumulate pensionable earnings for that employee

• Changes in Pay Periods or Pay Cheques:

Changing the number of pay periods during the year, or adding extra payroll runs (such as bonus payments) can produce errors in the CPP contribution calculations

• The number of payroll cheques issued to the employee does not equal the number of pay periods.

Maybe you paid bonuses without deducting the required statutory deductions, for example.

• Year-to-Date Totals Errors:

Data entry errors when transferring payroll information or inputting year-to-date totals during software changes can produce inaccurate CPP and EI calculations.

• Partial-Year Employment:

Employees who were not employed for the entire year may not qualify for the full annual exemption of CPP and EI.

• Multiple Employers in One Year:

Employees working for multiple employers during a single year can create complexities that may result in over or underpayment of CPP contributions. This can cause 2 types of errors:

1. Basic CPP Exemption: Each employee is entitled to a basic CPP exemption. However, when an employee works for multiple employers, and each employer calculates the basic exemption, this may result in CPP underpayment.

• CPP Contribution Maximum: If an employee maxes out their CPP contributions at one employer and then switches to another employer during the same year, the new employer is still required to deduct CPP contributions. This will lead to overpayments.

You can find more information about PIER assessments, and you can verify the calculations you filed with CRA on the PIER website at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/file-information-returns-slip-summaries/receiving-payroll/earnings-review.html

The payroll year-end is a busy time for payroll preparers. We’ll be providing more tips and topics over the next few weeks to help you improve your payroll workflow and compliance as you close out 2023 and prepare for the new payroll year

So, look for us in your email box and follow us on Facebook and LinkedIn.

Let WinTax help you prepare for a stress-free 2024 payroll year