Calculation of employee employment insurance (EI) premiums
This year-end calculation will help you verify an employee's EI premiums before you fill out and file the T4 slips. This optional calculation is the only one we authorize. We based the calculation on information in this guide and in Chapter 8 of Guide T4127, Payroll Deductions Formulas. You can get the information you need to fill in this calculation from each employee's payroll master file.
Using this calculation will help you avoid the possibility of receiving a Pensionable and Insurable Earnings Review (PIER) report.
To verify the EI deduction, follow these steps:
Step 1: Enter the insurable earnings for the year as indicated in each employee's payroll master file for the period of insurable employment. The amount should not be more than the maximum annual amount of $53,100 (for 2019).
Step 2: Enter the employee's EI premium rate for the year (1.62% for 2019 – for Quebec, use 1.25%).
Step 3: Multiply the amount in step 1 by the rate in step 2 to calculate the employee's EI premiums payable for the year. The amount should not be more than the maximum annual amount of $860.22 ($663.75 for Quebec) for 2019.
Step 4: Enter the employee's EI premium deductions for the period of insurable employment as indicated in the employee's payroll master file.
Step 5: Step 3 minus step 4. The result should be zero.
If the amount in step 5 is positive, you have underdeducted. If this is the case, add the amounts in step 4 and step 5 and include the total in Box 18 – Employee's EI premiums, on the T4 slip.
If the amount in step 5 is negative, you have overdeducted. If this is the case, check the employee's payroll master file to make sure that the amount in step 1 is correct. For more information on refunding EI overpayment, go to EI overpayment.
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