Personal Tax -> Business -> Canada Pension Plan (CPP), Quebec Pension Plan (QPP) and Employment Insurance (EI) -> CPP/QPP Rates
Canada Pension Plan (CPP) Contribution Rates
The Canadian Federation of Independent Business is asking the federal government to hold the CPP premiums at current levels in 2021, in light of the pandemic, instead of implementing the planned increase of up to 9.3%, depending on earnings level.
The 2021 rate of 5.45% (2020 5.25%) is broken down into 2 parts on the tax return: 4.95% + 0.50% for 2021, and 4.95% + 0..30% for 2020, with each part treated differently:
a. 4.95%: The employee maximum for the non-refundable tax credit for CPP premiums:
- 2021 is ($61,600 - $3,500) x 4.95% = $2,875.95.
- 2020 is ($58,700 - $3,500) x 4.95% = $2,732.40.
b. 0.50% (2020 0.30%): The "additional contribution", which is allowed as a deduction from income, not as a tax credit:
- of the 2021 maximum, $3,166.45 - $2,875.95 = $290.50 (also = ($61,600 - $3,500) x 0.50%)
- of the 2020 maximum, $2,898.00 - $2,732.40 = $165.60 (also = ($58,700 - $3,500) x 0.30%)
See Enhanced Canada Pension Plan below.
In the Detailed Canadian Income Tax Calculator for 2019 and later years, the total CPP + Enhanced CPP for employment income is shown near the bottom of the calculator, in the calculation of Total taxes, clawbacks, CPP/EI premiums. Since the CPP on self-employment income is calculated on the tax return and remitted in the same manner as income tax, it is shown separately and included in the total payable by the taxpayer.
Starting in 2019, there is an additional contribution of 0.15% x the YMPE, which is included in the 5.10% above. This is called the "first additional contribution" for the Enhanced CPP. On the tax return, the additional contribution will be allowed as a deduction. Employers will also pay the 0.15% additional contribution. Self-employed will pay both the employee and employer additional contributions, and will be able to deduct 100% of the additional contribution on their tax return. The first additional contribution will increase each year, so that in 2024 the total rate will be 5.95%, as follows:
2019 0.15% +4.95% = 5.10% total rate
2020 0.30% +4.95% = 5.25%
2021 0.50% +4.95% = 5.45%
2022 0.75% +4.95% = 5.70%
2023 1.00% +4.95% = 5.95%
In 2024 there will be an additional maximum pensionable earnings (YAMPE) calculated, which will be 107% x the YMPE. In 2025 the YAMPE will be 114% x the YMPE. The contribution amount (2nd additional contribution) will be 4% of the difference between the YAMPE and the YMPE. Self-employed will pay 8%. The 2nd additional contribution will also be deductible from income.
Contributors who make more than the YMPE are not required or permitted to make additional CPP contributions.
See Canada's Finance Ministers Agree to Strengthen Canada Pension Plan - June 20, 2016.
See Payroll Tax Calculators for different methods of checking payroll deductions, and an online payroll calculator which employers can use for calculating payroll deductions.
Self-employed and filing a tax return more than 4 years late? See our article on this.
Canada Revenue Agency (CRA) Information- T4032 Payroll Deduction Tables - for calculating payroll deductions
- CPP contribution rates, maximums and exemptions for rates from current and earlier years.
The QPP factors are the same as the CPP factors up to and including 2011. However, Revenue Quebec announced changes to the QPP contribution rate. The employee and employer rates each increased by 0.075% per year starting in 2012, until each of these rates reached 5.4% in 2017. The self-employed rate is 2x the employee rate.
Note: The basic annual exemption is $3,500.
Quebec will enhance the QPP in the same manner to which the CPP is being enhanced. The resulting rates will be:
2019 0.15% +5.40% = 5.55% total rate
2020 0.30% +5.40% = 5.70%
2021 0.50% +5.40% = 5.90%
2022 0.75% +5.40% = 6.15%
2023 1.00% +5.40% = 6.40%
As with the CPP, the additional contribution to the QPP is a deduction on the tax return, while the 5.40% contribution will be allowed as a non-refundable tax credit.
The QPP will use the same YMPE and YAMPE as the CPP, and it will be increased in the same manner, using the same 2nd additional contribution rate, as the CPP.
Quebec Pension Plan informationSource deductions and contributions - for calculating payroll deductions
TP-1015.G-V - Guide for Employers: Source Deductions and Contributions
Quebec Pension Plan - information about retirement pension, disability pension, and survivors' benefits
Revised: October 11, 2021
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