U2 Flashcards
Dieter is 17 years old. He works part-time during the school year and full-time during his summer break. If his contributory earnings for the year amount to $8,000 and the employee CPP contribution rate is 4.95%, how much must Dieter make in CPP contributions?
$0
The CPP contributory period begins the later of January 1, 1966, and an individual’s 18th birthday. Given that Dieter is only 17 years of age, he is not required to make CPP contributions.
Eli has employment earnings of $56,000. If the yearly maximum pensionable earnings (YMPE) is$50,100, what are Eli’s CPP contributory earnings?
$46,600
Based on a YMPE of $50,100 and a year’s basic exemption (YBE) of $3,500, Eli’s CPP contributory earnings are $46,600,calculated as [(the lesser of pensionable earnings and YMPE) - YBE] or [(the lesser of $56,000 and $50,100) - $3,500].
Lorna has pensionable employment earnings of $32,800. If the year’s maximum pensionable earnings are$55,300, what are Lorna’s CPP contributory earnings?
$29,300
The year’s basic exemption (YBE) has been frozen at $3,500 for several years. Lorna’s CPP contributory earnings are$29,300, calculated as [(the lesser of pensionable earnings and YMPE) - YBE] or [(the lesser of $32,800 and $55,300) -$3,500].
All of the following people are exempt from making CPP contributions, EXCEPT:
Jacqueline, who earns $7,000 per year as a result of her part-time job in the mall.
not considered pensionable employment - not earn more than the exempt amount $3500 - migratory workers not work at least 25 days a year - casual workers and babysitters - members of religious orders whose entire income is turned over to the order. Jacqueline must make CPP contributions on her earnings in excess of the basic exemption.
Even at 68 years of age, Avi has no intention of retiring or applying to receive Canada Pension Plan retirement benefits. If his employment income is $58,000 and the YMPE if $50,100, how much must Avipay in CPP premiums this year?
$2,306.70
CPP Contributions must be made until age 70 if the employee continues to work and chooses not to commence receiving CPP retirement benefits. The year’s basic exemption (YBE) has been frozen at $3,500 for several years. Therefore, Avimust contribute are $2,306.70 to the CPP this year calculated as [((the lesser of earnings and YMPE) - YBE) × employee CPP contribution rate] or [((the lesser of $58,000 and $50,100) - $3,500) × 4.95%].
Who would be INELIGIBLE to receive a CPP retirement pension immediately?
Amanda, who just retired at age 58.
Amanda will not be eligible to receive her pension until she turns 60 years of age. Belinda still qualifies for benefits even though she is under 65 years of age because she has attained age 60. Debbie may collect her pension even though she has not ceased employment because she is over 60 years of age.
Wong Li worked and paid the maximum in CPP contributions for 15 years. He was married to Lu Chi for10 of those 15 years. Lu Chi divorced Wong Li. Lu Chi never worked outside the home. RegardingWong’s CPP credits, which of the following statements is TRUE?
The CPP credits that Wong accumulated during the 10 years he was married to Lu Chi will be divided equally between himself and Lu Chi.
Canada Pension Plan keeps a record of the taxpayer’s contributions, which become the CPP pension credits. When the CPP receives notice of a divorce or annulment, the CPP pension credits accumulated by the couple during the calendar years they were married or cohabitated are divided equally between them.
Annie, who is 21 years old, lives in Saskatchewan and earns about $12,200 per year at her part-time job. She is attending college on a full-time basis. Both of Annie’s parents died earlier this year. Both of her parents contributed to the CPP throughout their working lives which, in each case, amounted to over 25 years. If the maximum orphan’s benefit is approximately $225, what amount is Annie eligible to receive from the CPP in survivor benefits?
approximately $450
An orphan of a deceased contributor may receive a monthly orphan’s benefit up to 18 years of age and up to 25 years of age if he or she is enrolled full-time in an approved educational institution. Two orphan’s benefits can be received if both parents, who contributed to CPP, are now deceased. Therefore, the maximum monthly benefit payable to Annie will be approximately $450 calculated as ($225 × 2). Eligibility for orphan’s benefits is not affected by the recipient’s earnings or marital status
Zorba and Helena are both 50 years old. They have been married for 25 years, worked full time, and paid the maximum Canada Pension Plan contributions for 30 years before they had a car accident in which both became disabled. All of the following statements are true, EXCEPT
the CPP benefits they receive are not treated as taxable income.
Benefits received under either Canada or Québec Pension Plans are taxable income to the beneficiary
Canada Pension Plan benefits are indexed:
annually, based on the Pension Index.
All CPP benefits are indexed annually by the Pension Index, which is the average of the changes of the annual Consumer Price Indexed for each of 12 consecutive 12-month periods, ending with October of the preceding year.
Which of the following statements about CPP employee contributions is TRUE?
They result in a non-refundable federal tax credit
An employee who makes CPP contributions can claim federal and provincial non-refundable tax credits (rather than claiming a tax deduction). Tax credits reduce taxes otherwise payable. CPP contributions do not impact an individual’s RRSP contribution room.
Krishna was born in 1950. He immigrated to Canada with his family in 1959 however, in 1973, he moved to Spain. He returned to Canada 12 years ago and has lived here ever since. When he becomes eligible to receive OAS benefits, what option will NOT be available to Krishna?
a partial OAS pension under the old rules
Clarice is 68 years old and has lived in Canada for the past 26 years. She intends to spend the next 18months visiting her daughter in Australia. What will happen to her OAS benefits?
They will continue while she is out of the country
Emily, who has lived in Canada for 17 years, is retiring at age 68 and intends to apply for OAS benefits. Aside from OAS benefits, Emily’s income will consist of a CPP benefit that is 65% of the annual maximum payable and a$28,000 pension from her former employer. If she had already qualified to receive an OAS benefit when she turned 65 years old, what factor will have the MOST SIGNIFICANT impact on the monthly OAS amount that Emily will receive going forward?
her intention to move permanently to New Zealand next year
Malcolm receives the Guaranteed Income Supplement. Which of the following statements is TRUE?
Malcolm’s GIS is reduced by $1 for every $2 of income in excess of the earnings exemption earned in the previous year, excluding OAS benefits
GIS benefits are reduced by $1 for every $2 of income in excess of the earnings exemption earned in the previous year, excluding OAS benefits. An individual receiving full OAS benefits may also receive full GIS benefits if he or she has no other income. GIS payments will be suspended if the recipient leaves Canada for more than six months
