I received a PIER Report and a Discrepancy Notice (PD4R) – what should I do?

Ahhhh, March. The year-end period is over, T4s and RL-1s are filed, and you can finally relax. You’re all ready to pour yourself a beverage and sit down for a night of bingeing your favourite TV show, only to notice an unread piece of mail – from the CRA. Gulp.

The contents of this unread letter are revealed to be a PIER report (Pensionable and Insurable Earnings Review) and/or a PD4R discrepancy notice, issued after your year-end filings. Now what do you do?

Don’t worry! We’re here to help you navigate these uncharted waters, and we’ve got the best Captain there is to lead the way: Ashley Mysak, NPI-trained and PCP-certified Team Lead of Service here at Payworks. Here’s what we’ll cover with Ashley:

• What a PIER report is, what a PD4R discrepancy notice is, and what the difference is between them.
• Why a PIER report or PD4R discrepancy notice may be issued.
• What steps you should take if you receive one of these reports.
• How Payworks can help you along the way!

So let’s set sail with Captain Ashley and bring this boat to shore, shall we?

What’s a PIER report?

“A PIER report is issued to employers by the Canada Revenue Agency (CRA) after all the T4 filings are completed,” says Ashley. “The CRA will compare all of the reported values on T4s to the required remitted values and identify any deficiencies for CPP, CPP2 or EI that were remitted for individual employees. The CRA will then identify the calculated deficiency and provide a list of the employee and employer portions that are due.”

Ideally, when finalizing T4s, amounts should match between what was reported to have been remitted for CPP, CPP2 and EI and what the required remittance values were based on that employee’s pensionable and insurable earnings. In order to ensure that employees (or their beneficiaries) can receive the proper CPP or EI benefits when they’re needed, the CRA must be certain that the amounts being paid into CPP, CPP2 and EI are correct and accurate.

What’s listed on a PIER report?

A PIER report will include:

• A listing of the employees affected.
• The amounts that were under-remitted or over-remitted, based on the CRA’s calculations.
• The listed amounts that the CRA used to make their calculations (based on T4 reported amounts).
• Any balance due.
  • Note that if a balance is due, it's up to the employer to pay both the employer portion as well as the employee’s portion as well.
• A remittance voucher or information on how to receive the funds for an overpayment.

What’s a PD4R discrepancy notice? How is it different from a PIER report?

“A discrepancy notice is different in that it’s issued when the total remittances made in the reporting year don’t match the total remittances reported via T4 and T4A filing,” says Ashley. “In this case, you’re looking at an overall difference for the year, rather than a difference at an employee level.”

Much like the PIER report, reported amounts for company total remittances in CPP, CPP2 and EI should match the actual remittance amounts that were submitted for the year. A PD4R discrepancy notice will also list any discrepancies for federal taxes.

What’s listed on a PD4R discrepancy notice?

A PD4R discrepancy notice will include:

• A statement explaining the discrepancy, with a breakdown of what may have caused it.
• The total amounts reported on a submitted tax return and information slips (T4 Summaries, for example).
• The total amounts remitted throughout the year.
• The amounts that the CRA calculated and/or has on record from third parties (such as financial institutions).
• The result of the assessment (a balance owing or a credit).
• Instructions on how to pay any funds owing or receive any eligible refund.

Did you know? “Revenu Québec may also issue a notice in the event of a deficiency or discrepancy following RL-1 and RL-1 Summary filings,” says Ashley.

These notices can be issued for a variety of remittances, including QPP and QPP2, QPIP, Health Service Fund (HSF), labour standards contributions, Workforce Skills Development and Recognition Fund (WSDRF), and provincial income tax. For more information, contact Revenu Québec.

For more information on how to read or understand your PIER report or PD4R discrepancy notice, reach out to your dedicated Customer Service Representative (CSR) or contact the CRA.

Why would I receive a PIER report or PD4R discrepancy notice?

While we know that a PIER report is issued when the EI, CPP or CPP2 collected, remitted and reported amounts don’t match the required amounts, that doesn’t tell us what may have happened to cause the inconsistencies.

“There are a few reasons that could cause the discrepancy,” advises Ashley. “This may be a result of a calculation error in manual payments, or even off-cycle payments. It could also be that a taxable benefit was recorded as an adjustment, without remittances being collected at the source. Another possibility is an incorrect date of birth being recorded – which can influence the CPP calculation.”

Now, what about those PD4R discrepancy notices? According to Ashley, there could be a couple of reasons:

“A PD4R discrepancy may be a result of an unused credit with the CRA that wasn’t carried forward, and without a remittance offset in the year to account for said credit. Another potential cause would be moving employees to different (Payroll Deductions) accounts and adjusting their year-to-date values, without actually transferring the remittances through the CRA as well.”

To determine the reason for the error or incorrect amounts, we recommend reviewing the following:

• Your T4 Summary and Audit Trail reports. Do the amounts match the totals of the Payroll Registers?
• The affected employee’s birthdate vs. what’s entered in your reporting software or system.
  • Did the affected employee turn 18 or 70 in the year? If so, that affects their eligible amounts for pensionable earnings, which in turn affects their pensionable contributions!
• Any adjustments made throughout the year to pensionable and insurable earnings and benefits. A Payworks client can easily review these entries using the handy-dandy One-Time Changes report!
• Were any remittances made to the CRA outside of what was remitted through payroll?
• Were any exemptions incorrectly declared on an employee’s TD1?

Additionally (and specific to PD4Rs):

• Are there any remittances ”in holding” with your payroll provider or financial institution that may not have made their way over to the CRA?
• Do you have a prior-year credit from the CRA?
  • This can be determined by reviewing your Statement of Account.
• Do you have more than one registered Business Number, and were any employees moved from one to another at any point?

These are just some of the reasons that a PIER report or PD4R discrepancy notice could be issued. If you’ve reviewed everything above and you’re still stuck, don’t be afraid to reach out to your CSR – that’s what they’re there for!

I received a PIER report or PD4R discrepancy notice. What do I do?

How to respond to a PIER report

The first thing you need to do is review all of your documentation to determine whether the deficiency is accurate.

“If it’s determined that the deficiencies are true, payment should be made to CRA, using the instructions provided with the notice,” recommends Ashley. “If investigation uncovers the deficiency isn’t true (due to a simple T4 reporting error, for example), employers should respond to the notice with the instructions provided by CRA. The CRA will then support with amended tax forms.”

How to respond to a PD4R discrepancy notice

This is an important one, so Captain Ashley is here to steer you in the right direction: “Employers must respond to the notice with the instructions provided – including an explanation for the CRA. If the CRA determined that the remittances were underpaid, payment should be made, using the instructions and voucher provided with the notice. If further investigation uncovers the remittances were overpaid, employers should respond to the notice with the instructions provided by CRA – explaining the difference, so that CRA may transfer any potential credit to the new year.”

The short answer: respond to the notice, no matter what. A PD4R discrepancy notice usually has a deadline for response, and missing the deadline can result in heavy penalties, daily interest, and even collection actions, so act sooner rather than later.

How Payworks can help

While you may be inclined to jump ship and not respond to the CRA’s notices, we recommend you stay the course. With Payworks, you don’t have to weather the storm alone – you can get all hands on deck so everything is shipshape and you’re ready to take the helm!

Okay, we may have leaned too far into the boat metaphor here, but what we’re trying to say is: we’re here to help. Whether it’s through our 24/7 Help Centre or a quick phone call to your Customer Service Representative, we have the resources you need to stay afloat (sorry – last one).

Want to stay on top of all things legislation and regulations to ensure you’re informed and your payroll is accurate? Check out our (free!) Payroll Guide, and stay compliant all year long to avoid receiving a PIER report or PD4R discrepancy notice in the future. Download it here: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.