The Canada Revenue Agency announced today that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2016 will be $54,900—up from $53,600 in 2015. The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.
Contributors who earn more than $54,900 in 2016 are not required or permitted to make additional contributions to the CPP.
The basic exemption amount for 2016 remains $3,500.
The employee and employer contribution rates for 2016 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.
The maximum employer and employee contribution to the plan for 2016 will be $2,544.30 each and the maximum self-employed contribution will be $5,088.60. The maximums in 2015 were $2,479.95 and $4,959.90.
The CPP applies in every province and territory in Canada with the exception of Quebec, where the Quebec Pension Plan (QPP) provides similar pensions and benefits.
Every employed Canadian over the age of 18 must contribute to the CPP (QPP for those employed in Quebec) to qualify for a retirement pension.
Contributions to the CPP end when a contributor turns 70.
The CPP provides retirement, disability and survivor benefits and pensions to contributors and their families.
Sign up for our newsletter and receive tax, accounting, and COVID-19 resources for your business!