Chapter 3 CPP

Question 0

What is the basic exemption for CPP

Answer 0

$3500

Question 1

What is the maximum pensionable earnings CPP?

Answer 1

50,100

Question 2

What is the maximum earnings subject to CPP contribution show calculation

Answer 2

$46,600 (50,000 - 3,500)

Question 3

What is the maximum required contribution for CPP? Show calculations.

Answer 3

$2306.70 (46,600 x 4.95%)

Question 4

What is the CPP rate

Answer 4

4.95%

Question 5

In which T4 box should the employer show the total CPP contribution deducted from employees pay

Answer 5

Box 16

Question 6

It which T4 box should be employer show employees pensionable earnings

Answer 6

Box 26

Question 7

What does next in the CPP portion in the box 28 indicate

Answer 7

That all employees earnings for the period of employment were exempt from CPP

Question 8

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?

Answer 8

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

Question 9

Karen age 50 has total pensionable earnings of $30,000. What is her required CPP contribution

Answer 9

$1311.75. (30,000 - 3,500) x 4.95%

Question 10

Mandy age 38 has a T4 slip showing $33,000 inbox 26, and $1500.19 inbox 16 what is Mandys required CPP contribution?

Answer 10

$1460.25 (33,000 - 3,500) x 4.95%

Question 11

What is the employees contribution rate for CPP

Answer 11

4.95%

Question 12

What is the employer’s contribution rate for CPP

Answer 12

The same as the employee 4.95%

Question 13

What employees earnings are exempt from CPP

Answer 13

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

Question 14

When are CPP earnings deducted

Answer 14

1. 18 to 70 years of age
2. In pensionable employment during the year
3. Not considered to be disabled under CPP and receiving CPP disability benefits

Question 15

If none of the employees earnings are pensionable what do you do

Answer 15

The checkmark is placed in CPP portion of box 28 box 16 and 26 are blank

Question 16

What box shows the amount withheld for CPP

Answer 16

Box 16

Question 17

What box shows the amount of pensionable earnings for CPP purposes

Answer 17

Box 26

Question 18

What do you do if you haven’t underpayment of CPP

Answer 18

No adjustment is needed you do not need to make up the difference

Question 19

How does underpayment of CPP occur

Answer 19

The taxpayer works for more than one employer and total earnings are less than the maximum pensionable earnings

Question 20

Why would you have an under payment of CPP

Answer 20

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

Question 21

How do you overpayments of CPP Occur

Answer 21

A person works for more than one employer in the year and the total earnings exceed the maximum pensionable earnings

Question 22

What is the reason for overpayments happening

Answer 22

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)

Question 23

What do you do if there is an overpayment of CPP

Answer 23

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

Question 24

When would you have to do proration for CPP

Answer 24

Contributions are less than a full year

Question 25

What are the situations in which you would have to use proration

Answer 25

1. Turns 18 during the year
2. Draws CPP disability benefit for part of the year
3. Is between 65 and 70 and receiving CPP retirement benefits and has elected to stop making CPP contributions

Question 26

How do you calculator proration for CPP

Answer 26

Maximum pensionable earnings and basic exemption are divided by 12 and then multiply the number of months in the tax payers contributory.