Haven’t run into this before. I have a client with a long-term mental disability who has received CPP Disability Benefits for at least a decade. Now he has a job that paid about $40K and paid CPP premiums. TC has calculated a “large” CPP overpayment (ie all of it!)…but I can’t find anything on whether this is correct or not?
Seems to me that both cannot be true? (Or will CPP simply disallow his benefit claim on a go-forward basis?)
I’d say he has more than that to worry about. I thought that if you were on a CPP disability benefit, you were prohibited from working.
My guess is that you’re right…but there may be a trial grace period to see if the person is good to go. Dunno, but I’ve called the mother, who might be in a better position to know as she’s always handled his finances etc.
Not necessarily, and not a tax limitation.
In order to qualify for CPP disability benefits (i.e. when applying), the individual must have a severe and prolonged condition that requires regularly (daily) assistance from a spouse or caregiver. For example, my wife is on CPP disability due to her rheumatoid arthritis. But that doesn’t stop her from earning employment income from a job that isn’t hindered by that particular disability (i.e. she can still drive to the post office and bank, so my firm pays her to do a few errands every month and issues her a T4 slip every year).
However, Service Canada may eventually request a re-assessment of the medical condition by a doctor, after which they may re-assess the disability benefit. But, it IS possible to receive disability benefits in the same year as employment income, from which CPP is withheld.
I’m sure you’ve checked whether it due to the client’s age, right? Not sure why else TaxCycle would calculate that the entire CPP withholdings are an overpayment.
“You must contact us when: You return to work and earn over **$7,400 (before tax) in 2026”
"Three-month work trial** If you return to work on a regular basis, you may be able to continue to receive your disability benefits for 3 months. This gives you and Service Canada time to evaluate your ability to work regularly. If you are still capable of working after 3 months, your CPP disability benefits will likely stop."
Perhaps he failed to contact Service Canada.
My guess would be that at some point he will be asked by Service Canada to repay certain disability benefit payment months, which in turn would mean he would be liable to to pay CPP premiums for those months.
This is crazy! I just had the exact same question and called TaxCycle support as my S8 is blank and 100% of the CPP contributions were calculated as an overpayment. They told me that the calculation was correct but I can’t find where it says this in the ITA. Thank you
Niina
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The CPP Act governs CPP, not the ITA, which governs Income Tax.
But CRA gives guidance at line 30800 and 44800
(https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-44800-cpp-overpayment.html)
I knew of 2 individuals who were told they could not work while on CPP disability. But, not my monkey, not my circus.
You do not make CPP contributions during the time that you are in receipt of CPP Disability payments. This is one of the reasons there is a number of months (box 23) of the T4A-P slip… it assists with the calculation in a year where there is earned income & CPP benefits.
Also, as @abechew309 pointed out, you are required to contact Service Canada if you return to work and your earnings go over $7,400 (during 2026).
Yeep - I’ll have to speak to the clients (both are young recovered addicts…which is part of the issue) to ensure that they DO talk with CPP and sort things out. I can only “report” what I get. So I’ll warn them that the large overpayment will likely need to be repaid in some form at some time.
It would be Service Canada who makes the ultimate decision of whether they were overpaid disability benefits. They would be the ones who the debt may be owed to. Sometimes Service Canada can be pretty good and just cut the person off their disability pension from the date the client notifies them. In other cases, where Service Canada finds out themselves the client is working full time and collecting CPP disability benefits they aren’t as forgiving.
As far as the income tax return goes, the CPP overpayment is simply that. That CPP over payment doesn’t seem to change or need to be paid back even if the client gets cut off their disability pension retroactively. The issued T4A(P) always stands. If the client subsequently pays back an over payment of benefits they get a deduction receipt in the year of repayment, not an amended T4A(P).
Thanks SPG…that’s good info for me to work with.