CPP Contributions & Benefits - Tax

Question 1

What are the tax implications of employer CPP contributions on behalf of an employee?

Answer 1

Non taxable to the employee

Tax deductible as a business expense to the employer

Question 2

What are the tax implications of employee CPP contributions?

Answer 2

Not tax deductible to the employee

But contributions qualify for non-refundable (15%) federal tax credit and non-refundable provincial tax credit

Question 3

What are the tax implications for self employed individual CPP contributions?

Answer 3

50% qualifies as a business expense deduction (employer)

50% qualifies for the non-refundable tax credit system (employee)

Question 4

What are the tax implications for all benefits received from CPP?

Answer 4

They are included as income in the year of receipt - taxed.

Retirement benefits do not qualify for the $2000 pension income non refundable credit or pension income splitting.

But pension benefits do qualify for pension sharing or assignment and credit splitting.

Question 5

What is the 2021 CPP contribution rate for employees, employers, self employed?

Answer 5

Employees - 5.45%

Employers - 5.45%

Self employed - 10.9%