Important information about overpayments and taxes

The Government of Canada is working hard to fix pay issues, but we understand that many employees continue to face challenges and may be concerned about tax issues caused as a result of an overpayment.

Overpayments usually occur when certain pay transactions are not submitted or processed promptly. As a result, an overpayment may happen when:

• an employee’s acting pay continues after an acting assignment has ended
• an employee continues to receive their regular salary after going on leave without pay
• leave without pay for five consecutive days or less is not entered into the system on time

It is important to submit transactions, such as a leave without pay, into Phoenix promptly in order to avoid overpayments or amended tax slips. We are asking that you please review any leave that has yet to be submitted and ensure that you enter the information into Phoenix as soon as possible. To ensure these transactions are accurately reflected on tax slips produced for the year, they should be entered no later than the first week of December during the same calendar year in which they occurred.

If you think that you have been overpaid, here is what you should do so that your tax slip does not include your overpayment amount.

1. Log in to Phoenix Self-Service and check for a pay stub with a Net Pay of $0.00. This type of pay stub indicates that an overpayment has been recorded, corrected and subtracted from your yearly earnings. If you have one of these pay stubs, no further action is required and your tax slip will not reflect the amount you were overpaid. If your tax slip had already been issued, you will receive an amended tax slip.
2. If you don’t have a $0.00 pay stub or if you think you have another overpayment, speak to your manager. You should confirm that transactions that could have caused the overpayment have been approved by your manager and submitted to your Human Resources branch.

We understand that payroll issues can be complex. Should you require any assistance, please contact the Client Contact Centre.

Having your overpayment recorded in Phoenix will help us ensure the accuracy of your tax slips, regardless of whether or not the overpayment has been repaid.

Please note that repayment of overpayments that are subject to Treasury Board flexibilities will only start when:

• all your outstanding transactions have been addressed
• you have received three consecutive correct pay cheques
• a recovery agreement has been established

Note: Employees with overpayments greater than 10% of their gross biweekly pay, eligible for flexibility measures, will receive a letter advising them of the amount owing, the cause of the overpayment and the flexible repayment options available to them. If the acknowledgement letter is not returned within the deadline specified in the overpayment letter, the recovery at the default rate will start immediately.

Additional resources

For additional information on overpayments and tax implications, consult the Overpayments and the pay system and Accessing and managing your tax slips web pages.