Are you self-employed? Here’s what the Canada Pension Plan enhancement means for you
As a self-employed person, you are juggling the unique role of both employer and employee. You need to carefully plan for changes that affect your budget. That’s why it is important for you to know about the Canada Pension Plan (CPP) enhancement.
Starting January 1, 2019, you began investing slightly more in the CPP to help you build a more secure retirement. The enhancement will increase the maximum CPP retirement pension benefit by about 50 per cent, once mature.
To fund enhanced benefits, annual CPP contribution rates will continue to increase modestly over seven years. The gradual increase is designed to help you adjust.
Did you know?
- On January 1, 2021, your CPP contribution rate increased from 10.5% to 10.9%.
- You will be able to deduct the enhanced portion of your CPP contributions when you file your 2020 tax return.
- If you retire or retired between 2019 and 2022, there will be little to no changes to your CPP benefits. The increased benefits are over the long term. The amount of increase in benefits you receive will depend upon how much and for how long you contribute to the CPP.
Consultation with self-employed
In the summer of 2019, we held part one of the CPP enhancement consultation for self-employed individuals. In this online public consultation, we asked you to tell us what you knew about the CPP enhancement, what you wanted to know, and how we could best tell you about it. We listened to your input and, in early 2020, we held part two of the CPP enhancement consultation for self-employed individuals. We wanted to hear your thoughts on a proposed tip sheet, containing information about the CPP enhancement, developed with your feedback in mind. We also asked you what other tax-related topics you would like to receive more information about. We received responses from 215 participants. Here's what we heard from you:
- The majority of you found that the tip sheet was easy to understand and helpful.
- Most of you preferred the colourful and eye-catching style over the more minimalist design.
- You gave specific comments to improve the tip sheet's design and the content.
- You said you would like to receive more information about tax deductions, tax credits, and expenses which can be claimed by self-employed individuals.
We will use these findings to develop communications products that will help you better understand the CPP enhancement, as well as tax deductions, tax credits and expenses. For more information on our findings and how we will apply them, see the Canada Pension Plan enhancement consultation with self-employed reports.
For more information
Webinars and Podcasts
- Webinar for businesses: Canada Pension Plan Enhancement
- Webinar for individuals: The CPP Enhancement and You
- Podcast Series Episode 5: CPP Enhancement – Introduction
- Podcast Series Episode 6: CPP Enhancement – Planned phases
- Webinar for self-employed: What the Canada Pension Plan Enhancement Means for You
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