---
title: What Is a CRA PIER Report — And How Can You Avoid It?
description: Learn about CRA PIER reports, common payroll errors that trigger them, and how to avoid costly compliance issues with our detailed checklist.
---

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# [What Is a CRA PIER Report — And How Can You Avoid It?](https://mesa.cpa/blog/what-is-a-cra-pier-report-and-how-can-you-avoid-it)

 Written by [David Oliveros](https://mesa.cpa/blog/author/david-oliveros) | Apr 21, 2025 1:57:30 PM

One of the most common payroll CRA reviews that many business owners face is the PIER assessment. This is because payroll is one of those things with a ton of little moving pieces, so many of us don't realize something is broken until its too late.

Let's talk about what a PIER report is and how you can avoid it.

## **What Is a CRA PIER Report?**

PIER stands for **Payroll Inspection and Evaluation Review**, and it’s how the CRA ensures accurate payroll deductions and remittances. The goal is to verify that your statutory deductions for **Employment Insurance (EI)** and **Canada Pension Plan (CPP)** have been calculated and

If there is a mismatch between what you paid and what the CRA expects - you're responsible for the difference (not fun if you didn't plan for that cashflow wise). And if you don't deal with that in a timely manner - you're also responsible for interest charges (not fun ever).

## **Most Common Reasons for a PIER Report**

To understand how we can avoid or resolve a PIER Report - lets start by taking a look at why they typically happen. The common reasons for a CRA PIER report generally stem from the complexity of payroll calculations, data entry errors, and changes in employee status or payroll processes. Here's a list of the most common errors we've seen:

Incorrect Employee Age or Birth Date

- CPP contributions are only required for employees aged 18 to 70.
- If an employee’s birth date is entered incorrectly, or if payroll systems aren’t updated when an employee turns 18 or 70, deductions may be missed or incorrectly applied.
- This often happens due to oversight or failure to update employee records promptly.

**Partial-Year Employment**

- The basic exemption is the amount of annual earnings on which no CPP (Canada Pension Plan) contributions are required - this is currently $3500/year
- This is prorated for employees who do not work the full year.
- If payroll systems or staff do not adjust the exemption for employees who start or leave mid-year, the calculated deductions will be off.
- This is a common oversight, especially with turnover or seasonal staff.

**Mismatched Number of Pay Periods and Cheques**

- CPP exemptions (see above) are applied per pay period. If the number of payroll runs (cheques) doesn’t match the expected frequency (e.g., extra runs for bonuses or off-cycle payments), your payroll system may apply the exemption too many times, resulting in under-deductions.
- This often happens when additional or off-cycle payments are made without adjusting the exemption calculation.

**Bonuses and Lump Sum Payments**

- Employers sometimes fail to deduct CPP and EI from bonuses or allow employees to roll over bonuses into RRSPs without proper statutory deductions.
- This oversight usually occurs if there isn't a proper payroll process for bonuses, where deductions are taken into account

**Year-End Adjustments and Data Entry Errors**

- Errors in entering year-to-date (YTD) totals, especially when switching payroll systems or making year-end adjustments, can lead to incorrect CPP/EI calculations.
- This is often due to manual data entry mistakes or incorrect carryover of YTD balances.

**Incorrect T4 Information**

- Mistakes in reporting Social Insurance Numbers, names, or exemption boxes (e.g., Box 28 on the T4) can cause mismatches between what was reported and what should have been deducted.
- These are typically clerical errors or misunderstandings of T4 reporting requirements.

**Payroll Frequency Changes or Rule Changes**

- Changing pay frequencies mid-year (e.g., from biweekly to semi-monthly) or modifying deduction rules can disrupt the calculation of statutory deductions, especially if not handled carefully in the payroll system.
- This usually happens if people make changes to their payroll schedule without checking that the deduction calculations are still accurate

**Rounding and Calculation Errors**

- Small rounding errors or miscalculations, especially when summed over the year, can cause minor discrepancies.
- While these are less likely to trigger a PIER report, they can contribute to cumulative errors if not monitored - especially when you have multiple employees

## **Checklist to Avoid a CRA PIER Review ✅**

Avoiding PIER assessments (and the penalties associated) usually is as simple as reviewing your payroll details quarterly. Here's the checklist we share with our clients:

1. **Check Employee Details**
   
     - Make sure every employee’s name, birth date, and Social Insurance Number are correct in your records.
     - Update your records if anyone turned 18 or 70, started, left, or changed roles this quarter.
     - If anyone gave you a form to stop CPP deductions (CPT30), make sure your payroll reflects that.
2. **Review Pay and Deductions**
   
     - Look at a few pay stubs for each employee. Check that CPP and EI are being deducted from every pay (unless they’re too young, too old, or opted out).
     - If you paid any bonuses or lump sums, make sure you also took off CPP and EI from those payments.
3. **Count Pay Periods**
   
     - Check that you ran payroll the right number of times this quarter (for example, 13 times if you pay biweekly).
     - If you ran any extra payrolls (like for bonuses or corrections), make sure CPP and EI were still deducted properly.
4.  **Spot-Check Year-to-Date Totals**
   
     - Look at the year-to-date (YTD) totals on a few pay stubs. Make sure the numbers look right and match what you expect for the year so far.
5. **Check for New or Departed Employees**
   
     - For anyone who started or left during the quarter, make sure they’re only getting the CPP exemption for the time they actually worked.
6. **Stay Up to Date**
   
     - If you changed payroll software or updated your system, double-check that CPP and EI rates are correct for this year.
     - Make sure you sent in all your payroll tax payments to CRA on time.
7. **Keep Good Records**

- Save copies of all pay stubs, CRA forms, and any notes about changes or corrections you made.
- If you’re not sure about something, write it down and ask your bookkeeper or payroll provider.

## **What Should You Do If You Receive a PIER Report?**

If you receive a PIER report or **PD4R notice**, here’s what to do:

- **Review the Report**
  
    - The PIER overview includes a table listing affected employees, pensionable/insurable earnings, and the balance owed.
- **Agree or Disagree**
  
    - If you agree, pay the credit balance or debit balance shown by the deadline.
    - If you disagree, respond with correct calculations and supporting documentation within 30 days.
- **Submit your response**
  
    - Use your CRA My Business Account or submit by mail/fax, as noted in the report.

## **Consequences of Inaction**

- No response = Notice of Assessment from CRA, including penalties.
- They may also issue amended T4s or benefit returns.

## **The Bottom Line: Don’t Let Payroll Mistakes Cost You**

The CRA isn’t out to get you. But if your payroll program, application program, or internal processes are off — even slightly — it can lead to PIER Reviews and compliance actions.

Suddenly, you’re not just managing your Employees & Payroll, but defending:

- Deductions (their share)
- Contributions (your share)
- ...to government officers.

Be proactive:

✅ Use systems like Wagepoint or a trusted accountant.

✅ Know your exemption column, your identification obligations, and your employer services officers’ expectations.

Avoid the dreaded year-end **PIER Notice** by staying ahead — and keeping your payroll squeaky clean.

[View full post](https://mesa.cpa/blog/what-is-a-cra-pier-report-and-how-can-you-avoid-it)

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