Peachtree Corners, GA, October 30, 2023 – TaxFactory Canada, from Business Software, Inc. (BSI), will support the Canada Pension Plan (CPP) second additional component.
The Canada Pension Plan (CPP) is a mandatory pension plan financed by contributions from employees, employers, and self-employed individuals. It covers virtually all workers in Canada except Quebec, which administers its own plan called the Quebec Pension Plan (QPP). The CPP replaces a basic level of earnings for contributors upon retirement, disability, or death.
With very few exceptions, every person over the age of 18 who works in Canada outside of Quebec and earns more than $3,500 per year must contribute to the CPP. If an individual earns less than $3,500, they do not pay CPP contributions.
An enhancement to the CPP to help increase retirement income for working Canadians and their families was introduced on January 1, 2019.
On January 1, 2024, the government is introducing a second earnings ceiling known as the Year’s Additional Maximum Pensionable Earnings (YAMPE). It will not replace the first earnings ceiling (the YMPE). Instead, it will subject worker’s earnings to two earnings limits. Beginning January 1, 2024, employees and employers will each contribute an additional 4% on earnings above the YMPE, up to the amount of the second earnings ceiling (the YAMPE). These are the second CPP contributions.
“For over four decades, we have provided value to our clients by offering the most up-to-date payroll tax information available, as quickly as possible,” said Russell Rindik, Senior Vice President, Operations. “We are proud of our efforts to stay abreast of all the changes occurring in Canadian payroll regulations and to keep our customers and partners apprised of what they need to know in order to calculate payroll taxes.”
*Nothing herein should be construed as tax or legal advice. As individual situations vary, consult an accountant or lawyer for specific guidance.