SH paid unnecessary EI

Accounting and Bookkeeping
1

Shareholder did their own payroll and I caught a few unnecessary EI payments made during the year when paying themselves. They’ve been set to EI except, however, there is a nominal amount that needs to be corrected from employee and employer EI premiums.

T4 summary

-Subtract unnecessary amounts from employee and employer EI premiums (box 18 & 19).

  • Unnecessary employee EI premium will be added to box 22

(Taxpayer will receive the amount as a refund on T1)

Box 80 will decrease by the unnecessary employer & employer EI premiums.

In the bookkeeping, I see no need to make an adjustment for unnecessary employee premiums because whether its an employee EI premium or income tax deducted it falls under payroll liabilities.

However, an entry will be necessary to correct the employer EI premium (expense)
DT Payroll Liabilities XXX
CT Payroll Expense XXX

Does anyone have any thoughts or anything they would like to add?

2

The cost of fixing might be more than the benefit if the EI amounts are nominal.

3

Just correct the amount plus the employer payment to tax instead. Adjust the paycheque as necessary to balance.

4

Thank you everyone for your input - greatly appreciated! Happy Friday and have a great weekend!