Unit 6 CPP Flashcards
When was CPP first introduced
Jan 1, 1966
What are two important facts about CPP
- takes priority over all other statutory deductions
2. must be the 1St one deducted
What is the age range for deducting CPP
age 18 to 70 years (unless disabled according to CPP)
When an employee turns 18 what do you do
you have to prorate
- start deducting the first pay following the month they turn 18
how do you prorate CPP
- based on # of months they will be 18 in that year
What is important about age 65 - 70
Can elect to stop CPP
- CPT30 form
- copy to employer, original to CRA
- will stop the first pay of the month following the date employer received the form
- can renstate too if they change their minds
What is important about age 70
- CPP stops with 1St pay of month following their 70th birthday
What is a short list of payments and benefits that do not Qualify as pensionable for CPP
- Pension payments
- Retiring allowances or severance payments
- Payments made after death of employee
- some WSIB??
What is the annual basic CPP exemption?
3,500
What is the maximum pensionable earnings
52,500
What is the monthly basic cpp exemption
291.66
what is the semi-monthly (24) basic exemption
145.83
what is the bi-weekly(26) basic CPP exemption
134.61
What is the bi-weekly(27) basic CPP exemption
129.62
What is the weekly (52) basic CPP exemption
67.30
What is the weekly (53) basic CPP exemption
66.03
What is the annual Maximum contributions earnings
52,500 - 3,500 = 49,000
What is the CPP contribution rate
4.95% (employer and employee)
What is the maximum deduction
$2,425.50
Ex1: Tim earns $1,000 paid weekly what is his CPP contribution per week
1,000 - (3,500 / 52)
1,000 - 67.30 = 932.70
x 4.95%
= 46.17
Ex2: Sara earns a salary of $1,236.00 paid bi-weekly.
She also has a monthly pensionable benefit of $75. what is her cpp contribution for each pay
75 x 12 = 900
/ 26
=34.62
\+ 1236.00
= 1270.62 pensionable earnings
less bi-weekly exemption
-134.61
= 1136.01
x 4.95%
56.24
E3: Regular wage pay plus bonus
Joan earns monthly salary of $3,700
Has a monthly taxable benefit of $300.00
a yearly bonus of $2,000 (on separate cheq)
Regular pay $3700
Taxable benefit 300
Gross income 4,000
Less montly exemption 291.66
contributory earnings 3,708.34
x4.95%
total CPP deduction 183.56
Cheq 2: Bonus
no exemption, was already applied on Chq 1
2,000 x 4.95% = $99.00
total CPP contributions: 282.56
the same would result if it was combined on both cheques
Reaching CPP Maximum
John earns a salary of $1,236.00 paid bi-weekly
bi-weekly pensionable benefit of $55.00
already contributed 2,398.00 in cpp this year
salary 1236.00
pensionable benefit 55
gross income 1,291.00
less exemption - 134.61
contributiory earnings 1156.39
x 4.95%
57.25
maximum contribution 2425.50
- 2398.
= 27.50
deduct 27.50 an no more for rest of year
E5 Employee turns 18 or 70 or dies
mike turns 18 on march 7, 2014
2,425.50 / 12 = 202.12
April - dec = 9 months
202.12 x 9 = 1819.12
this is his max contributions for 2014
tables: are helpful on cra website
Name 8 pensionable earnings
- all salary , wages, bonus, and other earnings received from the company
- value of taxable benefits received
- executive fees received
- certain tips and gratuities
- earnings received while on leave
- wage-loss benefits
- stock option benefits
- income form any workers compensation claim
earnings that do not qualify as pensionable (8)
- earnings from an agriculture, fishing, hunting, logging if employee less than $250
- casual labour but only if you know for an absolute fact that hey will earn less than $3,500 for the year
- Teachers on exchange from a foreign country
- employment of a spouse if you do not deduct the amount as an expense form your income
- employment of a member of a religious order
- Employment of a child where no cash remuneration was paid
- Employment for a disaster or rescue operation
- Employment by a government body as a census take or election worker
Other payments and benefits that do not qualify as pensionable for cpp contributions
- pension payments
- retiring allownaces or severance payments
- wage-loss benefits paid from an insurance co.
- payments made after the death of employee
- ad advance or loan by the co. to cover a workers compensation claim
- the amount must be repaid or cpp must be deducted - an amount equal to a workers compensation award form a self-insured employer
- benefits for clergy members
Paul run with dolly Lama and clean
