How to Avoid a CRA PIER Review

What is a PIER?

The Pensionable and Insurable Earnings Review is the CRA's annual reconciliation of the T4 information return. In plain terms: the CRA recalculates, for each employee, how much CPP and EI should have been deducted from the pensionable and insurable earnings you reported — and checks whether the deductions on the T4 slip agree. A discrepancy can produce a PIER listing and may require the employer to explain the difference or remit a deficiency.

The review exists because these deductions fund real benefits. Correct CPP contributions determine what an employee or their beneficiaries receive on retirement, disability, or death; correct EI premiums protect access to benefits during unemployment, maternity, parental, and compassionate-care leave.

If the CRA finds no deficiencies, you are not contacted. If it does, the PIER package includes a listing of the affected employees with the amounts the CRA used in its calculations, a summary showing any balance due, and a remittance voucher. Employers registered for My Business Account or Represent a Client can view, download, and reply to the PIER online, with PIER information available for the last five years; the letter is also sent by mail.

What is at stake

A PIER balance due can cover both the employer's and the employee's shares of the CPP or EI shortfall — the employee share included, because it should have been withheld at source. Recovering that employee share afterward is restricted: recovery from later payments is capped at the amount that should have been deducted from each payment, amounts outstanding for more than 12 months cannot be recovered, and income tax deductions cannot be adjusted to cover the shortfall. If the employee share cannot be recovered within those limits, it can remain an employer cost.

Which T4 boxes the review compares

For employment outside Quebec, the PIER relationship runs through four T4 boxes plus the exemption indicator:

How the CRA verifies CPP, CPP2, and EI

The CRA publishes year-end verification calculations employers can run at any time — before filing or across multiple pay periods — to confirm whether contributions were deducted properly, under-deducted, or over-deducted.

CPP — Box 26 to Box 16

Pensionable earnings (capped at the YMPE)
− basic exemption for the pensionable pay periods
× CPP rate
= required employee CPP contributions

Required CPP − CPP actually deducted (Box 16)
= 0 if correct; positive = under-deducted

Pensionable earnings means gross pay plus taxable benefits and allowances, minus non-pensionable earnings. Partial-year situations need care: employees who turn 18 or 70 during the year, CPT30 elections, CPP/QPP disability, and certain irregular payment schedules all change the pensionable period or require prorating the exemption and maximums by pensionable months.

CPP2 — earnings above the YMPE to Box 16A

Pensionable earnings above the YMPE
  (capped at YAMPE − YMPE)
× 4% CPP2 rate
= required employee CPP2 contributions

CPP2 has applied since 2024 to pensionable earnings between the maximum pensionable earnings (YMPE) and the additional maximum (YAMPE).

EI — Box 24 to Box 18

Insurable earnings (capped at the MIE)
× employee EI rate
= required employee EI premiums

Required EI − EI actually deducted (Box 18)
= 0 if correct; positive = under-deducted

Insurable earnings means gross pay plus insurable taxable benefits, minus earnings from which EI is not deducted. There is no basic exemption for EI — premiums start at the first insurable dollar.

2026 reference values (outside Quebec)

One nuance: pay-period deductions are rounded to the nearest cent, so a correctly run payroll can differ from a simple annual multiplication by a few cents. The CRA does not publish a numeric PIER tolerance, so do not assume a discrepancy is too small to matter — but a one- or two-cent difference is ordinarily the shape of rounding, not a deduction defect.

What triggers a PIER? The 7 common causes

A PIER is generated whenever the CRA's recalculation disagrees with the T4. These are the scenarios that most often produce that disagreement — the first four are the CRA's own listed common errors, the rest are the causes payroll teams most often run into in practice.

1. Box 28 completed incorrectly

The exemption indicator does not match the earnings and deductions on the slip — for example, CPP amounts in Box 16 alongside a CPP-exempt flag, or no flag for an employee who was exempt all year.

2. Age changes not reflected in deductions

For ordinary CPP coverage, deductions generally start with the first pay dated in the month after the employee turns 18 and stop after the last pay dated in the month the employee turns 70. A mid-year age change therefore changes the pensionable period; if deductions were not adjusted (or the birthdate in the payroll system is wrong), CPP and Box 26 can stop lining up.

3. Incorrect SIN or name

An incorrect social insurance number or name on the T4 slip prevents the CRA from matching the slip to the employee's account and can surface on the PIER listing.

4. CPP exemption applied more than once on extra payments

An off-cycle payment — a bonus, retroactive pay, or a manual pay run — processed as if a fresh pay-period basic exemption applied. Each employee gets one annual basic exemption, spread across the regular pay periods; separate bonus and irregular payments get no additional exemption.

5. Taxable benefits and earnings misclassified

If a taxable benefit or allowance is set up with the wrong CPP or EI treatment, the pensionable or insurable earnings are wrong and every downstream contribution is wrong with them. The classification should be decided when the earning type is configured — our Earnings & Deductions guide covers how CPP, EI, and tax treatment attach to each earning type.

6. Changes to the number of pay periods

CPP calculations spread the basic exemption across the expected pay periods of the year. If the pay frequency changed mid-year, or the employee received fewer or more cheques than the schedule implies, the exemption allocation — and therefore the CPP — can drift from the CRA's recalculation.

7. Year-to-date totals entered incorrectly when switching software

Porting a few deduction totals into a new payroll system is not enough: CPP2 depends on year-to-date pensionable earnings, and year-end reporting needs pensionable and insurable earnings as separate values. See Switching Payroll Mid-Year for what a safe migration actually requires.

The PIER timeline

How to respond to a PIER

If you agree with the CRA's calculations

You are not required to respond — simply remit the exact amount shown on the PIER by the deadline. My Business Account offers a Proceed to pay option in the PIER overview for paying the deficiency in full, or any remaining balance after a response.

If you disagree

You must respond by returning the PIER with the corrected information and an explanation, through My Business Account or Represent a Client, by mail to the return address on the PIER, or by fax to your National Verification and Collection Centre. If you neither reply nor pay in full by the reply date, a notice of assessment follows with applicable penalties or interest, or both.

Either way, do not file amended T4 slips yourself for a PIER. Where adjustments are required, the CRA prepares two copies of each amended slip and sends them to you — one for your records and one for the employee.

If you operate several payroll program accounts under one business number, the CRA compares all T4 returns for the business number together, so a deficiency can surface from the combined picture even when each account looked reasonable on its own.

If you find an under-deduction before the CRA does

When CPP or EI was under-deducted, the employer is responsible for remitting the balance due for both the employer's and the employee's shares. The employee's share can be recovered from later payments, subject to limits: the recovery per payment cannot exceed the amount that should have been deducted from that payment, amounts outstanding for more than 12 months cannot be recovered, and you cannot adjust the employee's income tax deduction to cover a CPP or EI shortfall. An amount recovered in a later year is not reported on the later year's T4 slip.

If the information return has not been filed yet, correct the deduction error before filing. If it has already been filed, follow the CRA's after-filing correction process instead.

How to avoid a PIER: 6 checks before you file

These six checks cover the CRA's listed common PIER errors plus several other practical causes of CPP or EI mismatches. Beanflow's year-end flow addresses them through its PIER-style preflight and its period-by-period catch-up history when you switch payroll systems.

1. Run the year-end verification calculations for CPP, CPP2, and EI on every employee before filing — the same arithmetic the CRA applies. Beanflow's preflight runs these comparisons automatically on every slip — Box 24 against Box 18, and Box 26 against Boxes 16 and 16A — using the official rates and maximums for the tax year.
2. Verify birthdates and track pensionable status changes — turning 18 or 70, CPT30 elections and revocations, and CPP/QPP disability all change what belongs in Box 26 and Box 16/16A. Beanflow checks each employee's pensionable status against their payroll history and routes age- or election-driven special cases to manual review rather than guessing.
3. Complete Box 28 only when the CRA's full-reporting-period exemption rule is met. A partial-year CPP or EI exemption normally does not make the T4 slip exempt, and some zero-box situations — including a CPT30 election or a retiring-allowance-only slip — must not be marked CPP exempt. Beanflow cross-checks the year's exemption history, reported T4 amounts, and supported reporting facts before setting Box 28. If the available facts cannot prove the correct Box 28 value, or if the facts contradict one another, year-end generation is stopped for manual review rather than guessing.
4. Classify earnings and taxable benefits once, consistently — the CPP and EI treatment of each earning type should be decided when it is configured, not reconstructed at year end. Beanflow freezes each earning's CPP and EI treatment on the approved payroll record. When an annual CPP or EI mismatch can be traced safely to approved history, the preflight surfaces the pay records and earning types that need review instead of presenting a guessed cause.
5. Audit off-cycle payments — bonuses, retroactive pay, and manual runs should never receive a fresh CPP basic exemption. Beanflow proves the year's actual pay-period pattern from approved history, so extra payments that disturb the exemption allocation surface as review findings.
6. Keep the full year's history when switching payroll tools — pensionable and insurable earnings matter as much as the deduction totals. Beanflow's supported mid-year migration workflow is period-by-period catch-up. Rebuilding each prior pay period preserves the pensionable and insurable earnings that the year-end checks need — see Switching Payroll Mid-Year.

Beanflow's built-in PIER-style preflight

Before the T4 Summary and XML are generated, Beanflow's preflight reviews every assembled slip for the year-end CPP/EI relationships above. It checks annual contribution consistency, validates Box 28 against provable exemption facts, and surfaces traceable records or earning types when a deficiency can be localized safely. The period-by-period catch-up workflow supplies complete history for employers that switched payroll systems mid-year.

Two boundaries are worth knowing. The preflight never rewrites your T4 boxes to the theoretical required amounts — Boxes 16, 16A, and 18 continue to report what was actually deducted, as the CRA's instructions require. And it is a consistency check, not a replica of the CRA's internal PIER processing: special cases the payroll history cannot prove, such as mid-year age or CPT30 transitions, are flagged for manual review against the CRA's year-end verification rather than guessed.