Self Employment Income - T4 Box 81 - T2125

[Galanb 7]

Last year I worked on an engagement with a client thru an agency. The agency treated me as self employed but deducted CPP and EI contributions (not my choice or agreement!). They have issued a T4 showing these deductions but with a blank Employent Income Box 14 (... I'm not considered an employee cos I am considered self employed...). The T4 shows a note in the Other Information section, with a Box 81 and the total of my earnings, along with the same earnings amount in Boxes 24 and 26.

I have created a T4 in Ufile showing exactly the above, including the Box 81 note. When I run Results, Ufile gave me a warning about "pensionable earnings entered for a T4 exceed the amount of T4 income" (problem 1), and it also tells me to complete a T2125 Business/Professional, Self Employment Income form (problem 2).

So, I completed a Professional Income and Expenses form in Ufile. This form has a mandatory field (red star), into which I entered my Gross Professional Fees - my self employed earnings (same amount as that in Box 81 on the agency T4). Immediately below this field on the form is a field for "Placement or employment workers (T4 Box 81)." I entered the same amount into this field. When I ran the Results tab, the problem 2 error message went away but the self employment income on the tax calculations summary was twice what it should be - which is not what I expected as this form is the only place I could enter the Box 81 cross reference from the T4. Next I went back and deleted the (duplicate) earnings amount from the Placement agency workers field - because Ufile will not let me delete the amount from the mandatory field - and now I am back where I started with Ufile telling me I must complete a Business Income form.

How can I resolve problem 2? And is it ok to ignore the warning from problem 1? Thank you.

[Bretonix 50]

1) enter zero (0.00) in the madatory field (red star)

2) enter the amount of T4, Box 81 in the line "Placement or employment workers (T4 Box 81)".

You can enter any expenses you incurred in the course of your engagement.

3) ignore the Warning "pensionable earnings entered for a T4 exceed the amount of T4 income".

[Galanb 7]

Thank you for your prompt response Bretonix ! Great job!

[Galanb 7]

I have a follow up question related to the above situation I described. I informed the program that I had filed a CPT30 to opt out of CPP contributions for 2013. The effective date of the opt out I put in the program was July 1, 2013 (which is 6 weeks prior to the start of the engagement.) The agency deducted CPP (and EI) contributions, which I entered into the T4 form in the general income section. I then completed the T2125 as discussed above.

My expectation was that having entered these various pieces of information that the Ufile program would determine that the (agency) deducted CPP would be considered an overpayment of CPP and that the program would recover/refund me these contributions (which is what I am trying to achieve). When I view the summary information there is no recovery/refund of the CPP contributions that were deducted in error. How can I remedy this and get these rerecovered/refunded by the Ufile program? Thanks.

[Elvira 32]

As per CRA, the employer has to deduct CPP contributions from an employee's pensionable earnings if that employee:

• is in pensionable employment during the year; and
• is not considered to be disabled under the CPP or the Quebec Pension Plan (QPP); and
• is 18 to 70 years old even if the employee is receiving a CPP or QPP retirement pension. Exception: do not deduct CPP if the employee is 65 to 70 years old, and gives you Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election with parts A, B and C completed.

I assume option 3 exception might be applicable to your situation. So if you forgot to advise your employer about the CPT30 election made or the employer did not take into consideration your election when issuing T4, you can request your employer to issue you new T4 form, where box 28 needs to be marked for CPP exemption, which will allow you to mark the equivalent box 28 in your T4 form for CPP exemption, which in turn will trigger 100% reimbursement of all the CPP payments made.