Hi daniell:

Usually when an employee buys the company he would be given a new CRA registration number or a different extension. So in fact he would have 2 T4 slips, one with the original CRA # and one with the new company under new ownership. So, one T4 slip would be EI applicable and one would be EI exempt.

Hope this helps!

Thanks for the reply.

The business number stayed the same as did all the accounts the only change was change of ownership.  I am going to create two T4's one for when he payed EI and one for when he was EI excempt

What I would recommend is one T4 slip.  Do NOT tick the EI Exempt box this year (you will tick it next year, when he will have been exempt the whole year).  For this year, you leave it unticked, you put the EI that was actually deducted in the EI deducted box, and you make sure that the EI insurable earnings box only includes his earnings from the part of the year when he was subject to EI.  If CRA asks 'why was EI insurable earnings so much less than box 40', just give them the above explanation.