T4 PIER Report CPP and EI Deficiency Calculator
The CRA compared your T4 slips against what should have been deducted and found a gap. Work out the shortfall per employee, the employer matching that comes with it, and why a small under-deduction costs more than twice what you expect.
total owing
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What Should Have Been Deducted
| Contribution | Basis | Required | Deducted | Short |
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What the Employer Owes
| Item | Basis | Per Employee | All Employees |
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Fixing It, In Order
| Step | Detail |
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Points That Decide This
What to Do Next
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Disclaimer: The Pensionable and Insurable Earnings Review compares the contributions reported on T4 slips against what the earnings on those slips required. For 2026 the Canada Pension Plan applies at 5.95% on pensionable earnings between the $3,500 exemption and the $74,600 maximum, with a second contribution at 4% between $74,600 and $85,000, each matched by the employer. Employment insurance applies at 1.63% on insurable earnings to a $68,900 maximum, with the employer paying 1.4 times the employee amount. The exemption is prorated where fewer than twelve months are pensionable. Where an employer failed to deduct, it is liable for both the employee and employer portions under section 227 of the Income Tax Act, together with interest and a penalty of 10% under subsection 227(8), rising to 20% for a repeat failure made knowingly or through gross negligence. The right to recover an under-deduction from an employee is limited and does not extend to amounts from a prior year in all circumstances. Interest here is estimated at 8% and the actual figure depends on the prescribed rates. This page is general information, not tax advice.
You Pay Both Halves, and EI Costs 1.4 Times
This is what makes a PIER assessment more expensive than the arithmetic suggests. Where an employer fails to deduct, it becomes liable for the employee’s contribution as well as its own. You are paying money you were supposed to have withheld from someone else’s pay.
| Per Employee, on a $62,000 Salary | Amount |
|---|---|
| CPP under-deducted | $281 |
| EI under-deducted | $111 |
| Subtotal, the actual shortfall | $392 |
| Employer CPP matching | $281 |
| Employer EI at 1.4 times | $155 |
| Total the employer pays | $827 |
A $392 shortfall costs $827, which is 2.1 times. Across six employees that is $4,962 for what looked like a small payroll error. The multiplier is why PIER letters land harder than people expect, and it is the same for every employee on the list.
What PIER Actually Compares
It is not a comparison of your remittances against your slips. The CRA takes the pensionable and insurable earnings you reported on each T4 and recalculates what the contributions should have been. If box 16 does not match the earnings in box 26, you get a letter.
That means a PIER can arise even where you remitted everything you deducted. The problem is the deduction, not the remittance.
Where the Errors Usually Come From
- The exemption applied more than once, usually where an employee was paid on more than one payroll or the frequency changed mid-year.
- Pensionable months not prorated where an employee turned 18, reached 70, or filed a CPT30 to stop contributing.
- Taxable benefits added to income but never run through the pensionable earnings calculation.
- A bonus or final payment processed outside the normal payroll.
- An employee who left and returned, with the exemption applied twice.
- Boxes 24 and 26 left blank, which makes the CRA default to box 14 and often overstates the requirement.
Check boxes 24 and 26 before paying anything. Leaving them blank tells the CRA to use box 14 as both pensionable and insurable earnings, which is wrong wherever the employee had non-pensionable or non-insurable income. A large share of PIER letters are answered by filing amended slips with those boxes properly completed, not by paying.
Recovering It From the Employee Is Limited
You can recover an under-deducted CPP or EI amount from an employee by deducting it from later pay, but only one additional amount per pay period and only in restricted circumstances. In practice, by the time a PIER letter arrives the employee has often left, and recovery is not realistic.
An amount you cannot recover and choose to absorb is a taxable benefit to the employee, which creates a further reporting obligation. That detail is missed frequently and turns one problem into two.
What to Do When the Letter Arrives
- Do not pay it first. Check the calculation, because the CRA is working from what you reported and errors in boxes 24 and 26 are common.
- Rebuild each employee’s position, taking account of pensionable months, second employment and any CPT30 election.
- File amended T4 slips where the original ones were wrong rather than the deductions.
- Pay the genuine shortfall promptly, because interest runs from the original remittance dates.
- Fix the payroll setup, since the same error usually repeats across every year the settings were wrong.
- Check the prior years, because an error found in one year is rarely confined to it.
The Penalty Is Not Automatic
Subsection 227(8) imposes 10% of the amount that should have been deducted, rising to 20% for a repeat failure made knowingly or through gross negligence. The CRA does not always apply it on a first PIER where the employer responds properly and the error was genuine.
That is worth knowing before you assume the penalty is part of the bill. Responding quickly and correcting the payroll setup is what keeps it off.
What This Calculator Does Not Cover
- Employees with materially different salaries, since one average is applied to all
- Quebec, which has its own pension plan and parental insurance plan
- CPP disability recipients and other special exemptions
- Non-arm’s length employees, whose employment is generally not EI insurable
- Over-deductions, which produce a refund rather than an assessment
- The income tax side, which PIER does not review
Most PIER letters are worth checking before they are worth paying. Our payroll compliance service covers the review, the amended slips and the corrected setup.
Frequently Asked Questions
Common questions on PIER letters.
Related Calculators and Guides
More tools for payroll compliance.
Check the Letter Before You Pay It
Send us the PIER letter and the T4 slips. We will rebuild each employee’s position, file amended slips where the reporting was wrong rather than the deductions, and fix the payroll setup so it does not repeat.