# A Twisty Tax Situation.. Advice appreciated



## wrhlreferee (Jun 14, 2009)

So I was reviewing my CPP contribution history over the last few months, and noticed a strange gap in 2001 - apparently I made zero contributions to CPP that year, even though I was working full time. 

I dug up my old T4 and sure enough, I had contributed the max.

So, I figured I shouldn't miss out on what will be eventually coming to me in retirement, and so sent a correction request into CRA to have them fix their records.

Here's what I received back from them.. what should I do?

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Re: 2001 Canada Pension Plan Contributions

Further to your enquiry of April, 2010, we have reviewed the entries in your Canada Pension Plan (CPP) Record of Earnings. When we assessed your 2001 income tax return, we refunded you the CPP contributions withheld from the remuneration your employer paid you, and which you reported on your return.

The amount credited to you was $1496.40 which should have been $0.00. As a result, the related pensionable earnings shown to your credit were reduced for this period.

We can now revise your 2001 CPP Record of Earnings, if you are willing to repay the required contributions of $1496.40.

Please advise us within 30 days whether or not you want to repay the contributions. Etc. etc. etc...

________________________

This one is beyond me - any advice is appreciated! Thanks everyone.


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## Berubeland (Sep 6, 2009)

I guess the question is did you get the $1400 back on your taxes or not?


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## andrewf (Mar 1, 2010)

Seems simple to me. If you did indeed receive that refund, then if you choose, just repay the amount. You got to use that money interest-free for 9 years!


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## cardhu (May 26, 2009)

As the others have said, the answer depends on whether you did indeed receive the refund they say you did ... if so, then you have a choice to make ... 

But before you send them a cheque, consider whether this will have any impact on your benefits ... the CPP benefit calculation drops out certain low-income year anyway, so if it is your intention to work at least to age 60 (or so, depending on your history of earnings), then it may be to your benefit to NOT repay the amount, and leave things be. 

If you intend to retire substantially earlier, then it might impact your CPP benefit amount, but you'd have to do a cost-benefit analysis to see whether a $1500 payment, made in 2010 dollars, is worth the few pennies of additional CPP it would produce.


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## MoneyGal (Apr 24, 2009)

Cardhu I am following you around the internet. 

I concur with Cardu's points. One other point, though, is that CPP is a relatively "generous" benefit. If you bought an annuity with the money you'd otherwise be putting into CPP, you'd get a lower payout (leaving aside the practical impossibility of buying an annuity with $1400).


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## OhGreatGuru (May 24, 2009)

I can't figure out how OP would have been eligible for refund of his CPP contributions in the first place if he was working full time, for an employer who was deducting at source. If he was under 18 he would qualify for a refund, but then CRA wouldn't tell him he could buy it back now. If his employment/earnings were of a type where CPP contributions are optional, his employer would not have made deductions at source. Better find his 2001 return and look into what the reasons were for the refund (assuming they were refunded).


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## cardhu (May 26, 2009)

It was a mistake on CRA's part, which they clearly state in their response.
If their mistake is to the OP's benefit, so much the better.


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