# Repaying maternity top-up (tax question)



## MikeT (Feb 16, 2010)

Sister-in-law took maternity leave from July '09 to June '10. Afterward didn't return to work as she wanted to stay home with her child for a while longer. 

Collected the EI maternity benefit for 1 full year. Her employer gave her a top-up benefit for 6 months July-Dec'09. The top-up was an amount of money that would "top-up" the EI payments and essentially give her her full salary for 6 months. Ended up being around $7000 or so. 

Because she didn't return to work she was required to pay back the money to her employer which she did in August 2010.

Her employer wants to send her an adjusted 2009 T4, and suggests she file a 2009 T1 adjustment. 

I had what I think is a similar situation several years ago with paying a signing bonus back in the next tax year. I simply made a current year deduction for the repayment and never needed to re-file the previous years T1.

Anybody know which way is correct? Or are these situations apples and oranges?

(and if a mod would like to move this to the tax section that'd be great because I accidentally posted in the general section.)


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## ghostryder (Apr 5, 2009)

Line 229 of your return.

http://www.cra-arc.gc.ca/E/pub/tg/5000-g/5000-g-03-10e.html#P952_122406

Repayment of salary or wages - You can deduct salary or wages you included in income for 2010 or a previous year, if you repaid them in 2010. This includes amounts you repaid for a period when you were entitled to receive wage-loss replacement benefits or workers' compensation benefits. However, you cannot deduct more than the income you received when you did not perform the duties of your employment.




So she can simply put the amount she repaid as a deduction on line 229 of her 2010 return.


And for her employer:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4/rrrs/rpymnt-eng.html

Repayment of salary or wages by an employee When an employee repays an employer, in the same or a later year, for salary or wages paid when the employee did not perform his or her duties (for example, the employee was ill and received payments from a wage-loss replacement plan), the repayment is considered to be a repayment of salary and wages. It may be claimed as a deduction on the employee's income tax and benefit return. You should give the employee a letter confirming the date and the amount repaid.

Note
*You cannot adjust the employee's T4 slip to reduce the total employment income or the CPP pensionable and EI insurable earnings.* In addition, you cannot adjust your pay records to reflect the amount of repayment. Your part for CPP pensionable and EI insurable earnings is not refundable.


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## MikeT (Feb 16, 2010)

Thankyou ghosty.

It's funny you posted that because that's the same thing I found this morning and had her send to her employer. Their reply was that it isn't a wage loss replacement but rather a special top-up that is treated differently and hence an adjustment to 2009 was necessary. 

I promptly called CRA directly and asked about it. CRA agrees with them. I still can't find any actual documentation on it anywhere so I might call them back tomorrow and see if they can point me to the actual law or whatever.


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