Overpayments on your public service pay
Overpayments and your income taxes
The timing of when the overpayment is recorded in the pay system may impact your income taxes.
Recorded in the current tax year
If your overpayment is recorded in the pay system in the same year it occurred and before the original tax slips for that year are produced, tax slips and earnings for that year will not include the overpayment.
The overpayment amount will not be considered as income for that year, and you will not be taxed on it.
Recorded in a previous tax year
If your overpayment is recorded in the pay system for a previous tax year, the employer will amend tax slips and send them to the Canada Revenue Agency (CRA), and Revenu Québec, if applicable.
Within 3 years
If the overpayment is recorded in the pay system within 3 years of the payment date, the employee will only need to repay the net amount.
The net amount is the overpayment amount minus the taxes the employee already paid on it.
After 3 years
If the overpayment is not recorded in the pay system within 3 years of the payment date, the employee will need to repay the gross amount.
The gross amount is the total overpayment the employee received, before taxes were deducted.
The CRA and Revenu Québec will not automatically reassess tax returns if the amended tax slip is received more than 3 years after the employee received their notice of assessment for the year of the overpayment. The employee must request a reassessment from the tax agencies to receive a refund for the taxes they already paid.
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