Canadian Tax Adviser
January 10, 2012

CPP Refunds Nixed by Retroactive Tax Change

Mark Worrall
GVA, Indirect Tax

Taxpayers are no longer entitled to recover Canada Pension Plan (CPP) employer premium overpayments made for employees on temporary leave from employment who receive disability- or parental leave-type payments, due to legislative amendments to the CPP included in federal Bill C-13. Surprisingly, this change was made to the CPP retroactive to January 1, 2006. As a result, certain potential refund claims for prior years are no longer valid.

Background
Legislation to enact several tax measures announced in the 2011 federal budget, tabled as Bill C-13, received Royal Assent on December 15, 2011. Bill C-13 retroactively broadened the scope of the CPP to include any payments made in respect of employment, including overpayments made for employees on temporary leave from employment.

This legislative change effectively reverses a Federal Court of Appeal case that found that certain disability payments to employees were not for employment services and thus were not pensionable earnings for CPP purposes under the Canada Pension Plan Act (Toronto Transit Commission v. The Minister of National Revenue).

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