Chapter 3 CPP Flashcards
What is the basic exemption for CPP
$3500
What is the maximum pensionable earnings CPP?
50,100
What is the maximum earnings subject to CPP contribution show calculation
$46,600 (50,000 - 3,500)
What is the maximum required contribution for CPP? Show calculations.
$2306.70 (46,600 x 4.95%)
What is the CPP rate
4.95%
In which T4 box should the employer show the total CPP contribution deducted from employees pay
Box 16
It which T4 box should be employer show employees pensionable earnings
Box 26
What does next in the CPP portion in the box 28 indicate
That all employees earnings for the period of employment were exempt from CPP
Peter is 66 years old retired and collecting CPP retirement benefits. Peter has decided to return to work on a part-time basis, what will happen to his CP benefits? What option does he have regarding his CPP contributions?
He will continue to receive his CPP retirement benefits. Peter can choose to file a CPT 30 election with CRA and informed his employer to not deduct CPP contributions from his earnings or start to contribute again to CPP and receive post retirement benefits
Karen age 50 has total pensionable earnings of $30,000. What is her required CPP contribution
$1311.75. (30,000 - 3,500) x 4.95%
Mandy age 38 has a T4 slip showing $33,000 inbox 26, and $1500.19 inbox 16 what is Mandys required CPP contribution?
$1460.25 (33,000 - 3,500) x 4.95%
What is the employees contribution rate for CPP
4.95%
What is the employer’s contribution rate for CPP
The same as the employee 4.95%
What employees earnings are exempt from CPP
Casual employment, direct tips, and other specified types of employment not subject to CPP
Also, 65 to 7 years old and received CPP retirement pension and has completed the CPT 30 election to stop contributions to CPP
When are CPP earnings deducted
- 18 to 70 years of age
- In pensionable employment during the year
- Not considered to be disabled under CPP and receiving CPP disability benefits
If none of the employees earnings are pensionable what do you do
The checkmark is placed in CPP portion of box 28 box 16 and 26 are blank
What box shows the amount withheld for CPP
Box 16
What box shows the amount of pensionable earnings for CPP purposes
Box 26
What do you do if you haven’t underpayment of CPP
No adjustment is needed you do not need to make up the difference
How does underpayment of CPP occur
The taxpayer works for more than one employer and total earnings are less than the maximum pensionable earnings
Why would you have an under payment of CPP
Because $3500 basic exemption is factored into the tax tables used by each employer therefore it’s applied more than once if you Have more than one employer
How do you overpayments of CPP Occur
A person works for more than one employer in the year and the total earnings exceed the maximum pensionable earnings
What is the reason for overpayments happening
Because each of flirty decks contributions contributions continue to be deducted by each employer even after the yearly maximum has been reached ( more than one employer)
What do you do if there is an overpayment of CPP
Overpayments are reported on the tax return
They may be refined it to the tax payer
Extra amount is claimed on line 448 of the T1
When would you have to do proration for CPP
Contributions are less than a full year
What are the situations in which you would have to use proration
- Turns 18 during the year
- Draws CPP disability benefit for part of the year
- Is between 65 and 70 and receiving CPP retirement benefits and has elected to stop making CPP contributions
How do you calculator proration for CPP
Maximum pensionable earnings and basic exemption are divided by 12 and then multiply the number of months in the tax payers contributory.
