Why is my EI insurable earning not matching the gross earned

Cause 1: Income or deduction is not checked off to calculate EI

1. Verify (with your accountant) all incomes (or deductions) are properly setup for EI
2. Click Setup, Settings, and then Payroll, Incomes
3. Check that the Calc EI should apply where CRA requires
4. Click Setup, Settings, and then Payroll, Deductions
5. Verify that you are deducting after EI and not before EI is calculated where CRA requires
6. Any discrepancy will come from these two.
7. Sage 50 does not calculate EI on the non-changeable Benefits income but does calculate CPP

Example:

Cause 2: A manual max EI insurable earning amount has been entered

1. Verify there is no manual cap of the EI Insurable Earnings
2. Open an employee record
3. Click the T4 and RL-1 Reporting tab
4. For the year in question, verify if the EI Ins. Earnings: amount is wrong
5. It could be someone had manually overridden the amount which then makes this number incorrect
6. If it is incorrect, then manually update it and click Save and Close

Cause 3: The EI deduction has been manually modified and overpaid on some of the paycheques

• The EI insurable earnings are calculated based on the EI deduction
• Example for Jan 1, 2014 with 26 pay periods:
  • EI employee rate is 1.88%
  • A paycheque has gross of $2500.00 (EI Insurable Earnings)
  • The EI amount should be $47.00 ($2500.00 * 0.0188)
  • But if you manually override the employee EI contribution to, for example, $120.00 then the reversed Gross (EI Insurable Earnings) is:
    • $120.00 / 0.0188 = $6382.98

1. Make a backup
2. The payroll year is already over and there are no more paycheques to process: Create a backdated (DEC 31) paycheque and zero out everything
3. Manually edit the EI amount to lower or increase as necessary
4. Post the paycheque
5. If your bank account is affected, make the necessary general journal entry

   Note: If unsure, contact your accountant

6. The payroll year is not over and there are future paycheques to process:
7. Adjust the next paycheque that is issued to the employee to alter the total EI amount for the year.

Cause 4: The Sage 50 payroll update wasn't installed prior to the first set of paycheques for the year

1. Make a backup
2. The payroll year is already over and there are no more paycheques to process: Create a backdated (DEC 31) paycheque and zero out everything
3. Manually edit the EI amount to lower or increase as necessary
4. Post the paycheque
5. If your bank account is affected, make the necessary general journal entry

   Note: If unsure, contact your accountant
   

6. The payroll year is not over and there are future paycheques to process: Adjust the next paycheque that is issued to the employee to alter the total EI amount for the year