If you collected regular or fishing Employment Insurance benefits and your net income for 2026 tops $86,125, you have to pay some of that money back through your tax return. The EI clawback takes 30% of whichever is smaller: the amount your income exceeds the threshold, or the total regular and fishing benefits you received.1Employment and Social Development Canada. EI and Repayment of Benefits at Income Tax Time It is calculated on your T1 return and collected by the Canada Revenue Agency. Plenty of people who receive EI never face it, and several benefit types are exempt entirely.
Who Actually Has to Repay
Two conditions have to line up before the clawback applies to you.
The first is income. Your net income from all sources, including the EI benefits themselves, wages, investment income, and self-employment earnings, has to exceed $86,125 for the 2026 tax year.1Employment and Social Development Canada. EI and Repayment of Benefits at Income Tax Time The threshold is set by the Employment Insurance Act at 1.25 times the maximum yearly insurable earnings, so it moves up each year.2Justice Canada. Employment Insurance Act SC 1996, c 23 – Section 145
The second is your claim history. You must have received at least one week of regular or fishing benefits in the ten tax years before the current one.2Justice Canada. Employment Insurance Act SC 1996, c 23 – Section 145 If you have not, you are treated as a first-time claimant and the clawback does not apply to you at all, even if your income is well above the threshold.1Employment and Social Development Canada. EI and Repayment of Benefits at Income Tax Time Once you lose that first-time status, it does not reset. Any future year in which you collect regular or fishing benefits and earn above the threshold will trigger the calculation again.
Which Benefits Count
Only regular benefits and fishing benefits are subject to repayment. Section 145 of the Employment Insurance Act explicitly excludes “special benefits,” the Act’s umbrella term for maternity, parental, sickness, compassionate care, and family caregiver benefits.2Justice Canada. Employment Insurance Act SC 1996, c 23 – Section 145 Special benefits stay out of the calculation no matter how high your income.
This matters if you received a mix of benefit types in the same year. Say you collected 15 weeks of parental benefits and then 10 weeks of regular benefits after a job loss. Only the regular portion enters the formula. The parental amount is off the table.3Treasury Board of Canada Secretariat. Maternity/Parental Allowance Return to Duty Obligation/Benefits Clawbacks Fishing benefits, on the other hand, are treated the same as regular benefits.
How the Repayment Is Calculated
The math is straightforward. Repay 30% of whichever is smaller: the amount your net income exceeds $86,125, or the total regular and fishing benefits you received.1Employment and Social Development Canada. EI and Repayment of Benefits at Income Tax Time That “lesser of” rule caps the damage: you will never owe back more than 30% of what you actually collected.
A worked example. Suppose your net income for 2026 is $92,000 and you received $5,000 in regular EI:
- Excess income: $92,000 minus $86,125 equals $5,875
- Benefits received: $5,000
- Lesser of the two: $5,000
- Repayment: 30% of $5,000 equals $1,500
Now flip the numbers. Net income of $88,000, benefits of $8,000. Excess income is $1,875. Since $1,875 is smaller than $8,000, you take 30% of $1,875, which is $562.50. People who barely cross the threshold pay relatively little back.
Where It Goes on Your Return
Early in the year you will receive a T4E slip (Statement of Employment Insurance and Other Benefits). Two boxes matter for the clawback. Box 7 shows your repayment rate; if it reads 30%, the clawback applies. Box 15 shows the benefit amount that may need to be repaid. If box 7 is blank or 0%, no clawback applies to you. The back of the slip has a repayment chart that walks through the calculation.4Canada Revenue Agency. T4E Slip: Statement of Employment Insurance and Other Benefits
The repayment goes on line 23500 (Social Benefits Repayment) of your T1 General. It increases your total payable, which either shrinks your refund or adds to your balance owing.5Canada Revenue Agency. Line 23500 – Social Benefits Repayment If you also have to repay Old Age Security because your income triggered that separate clawback, both amounts combine on the same line using the Federal Worksheet.
Line 23200 Is a Different Situation
Line 23500 handles the income-based clawback. There is a separate scenario: you were overpaid EI at some point and repaid the excess directly to Service Canada. If that happened, the repaid amount appears in box 30 of your T4E, and you claim it as a deduction on line 23200 (Other Deductions) instead.5Canada Revenue Agency. Line 23500 – Social Benefits Repayment If the overpayment was already deducted from your benefits before you received them, your T4E shows only the net amount and no separate deduction is needed. Confusing these two mechanisms is one of the more common EI filing mistakes.
Deadlines and What Happens If You’re Late
The repayment is due when you file your T1 return. For most people that is April 30 of the following year. Self-employed filers (and their spouses) get until June 15 to file, but any balance owing, the EI clawback included, still has to be paid by April 30 to avoid interest.6Canada Revenue Agency. Due Dates and Payment Dates – Personal Income Tax That catches some self-employed filers off guard.
Missing April 30 triggers two things. The late-filing penalty is 5% of your balance owing, plus 1% for each full month the return stays outstanding, up to 12 months. If you were penalized for late filing in any of the three preceding years and received a demand to file, that jumps to 10% plus 2% per month for up to 20 months.7Canada Revenue Agency. Interest and Penalties on Late Taxes – Personal Income Tax Compound daily interest also runs on any unpaid balance starting May 1.
If You Can’t Pay in Full
If you owe more than you can pay by April 30, the CRA will work with you on a payment arrangement rather than letting penalties compound. You can set up pre-authorized debit payments through the CRA’s My Account portal, or call the TeleArrangement service at 1-866-256-1147 for personal income tax debts.8Canada Revenue Agency. Payment Arrangements Before you set anything up, fill out the CRA’s personal income and expense worksheet so the monthly figure you propose is realistic. Interest keeps accruing during an active arrangement, so faster payoff saves money.
If you have to miss or change a scheduled payment, contact the CRA before the next debit. Skipping without notice can cause the agency to treat the arrangement as broken and start collection action.8Canada Revenue Agency. Payment Arrangements
In more serious situations, Form RC4288 (Request for Taxpayer Relief) lets you ask for the penalties and interest to be cancelled or waived. The CRA considers three grounds: extraordinary events like natural disasters or serious illness, errors or delays caused by the CRA, and financial hardship that makes payment impossible.9Canada Revenue Agency. Cancel or Waive Penalties and Interest at the CRA Decisions currently take up to 12 months. Relief can wipe out penalties and interest but does not reduce the underlying clawback itself.
If You Think the Assessment Is Wrong
Errors happen. A T4E can overstate what you received, or a clawback can be applied to benefits that should have been exempt. Your route depends on where the mistake started.
Fixing the T4E
If the numbers on the slip are wrong, contact Service Canada first. They issued it and are the only ones who can amend it. Once a corrected T4E is issued, adjust your return through CRA My Account by selecting “Change my return,” or use the ReFILE service in certified tax software. Online adjustments typically process within two weeks. You can also mail Form T1-ADJ with supporting documents to your tax centre, but that takes up to 12 weeks.10Canada Revenue Agency. Changing a Tax Return Wait until you have your Notice of Assessment before requesting any change.
Filing a Formal Objection
If the CRA’s assessment itself is wrong and an informal adjustment does not fix it, file a Notice of Objection using Form T400A.11Canada Revenue Agency. T400A Notice of Objection – Income Tax Act The deadline is 90 days from the date the Notice of Assessment was sent to you.12Canada Revenue Agency. Objections and Appeals Filing an objection does not pause the obligation to pay. If you win, you get the money back; if you refuse to pay while the dispute is pending, interest keeps running. Most tax professionals recommend paying the disputed amount and then recovering it after a favorable ruling.
When your Notice of Assessment arrives, check it against your own calculation. Common discrepancies include the CRA not recognizing first-time claimant status, applying the clawback to exempt benefit types, or using a different net income figure than what you reported. The Notice explains any adjustments the CRA made and the reasons for them, and it is the starting point for either an informal fix or a formal objection.