Changes to the Canada Pension Plan effective January 1, 2012
Welcome to the Canada Revenue Agency's webinar entitled Changes to the Canada Pension Plan effective as of January the first, 2012.
This is a recording of a webinar originally broadcast in December of 2011.
We hope that you find the webinar helpful.
Hello, everyone and welcome to our webinar on Bill C-51.
My name is Terry and I work for the Canada Revenue Agency as a Technical Policy Advisor.
I work on the Policy Section of the CPP/EI Rulings Division, which is part of the Legislative Policy and Regulatory Affairs Branch.
I'm here today with my colleague, Dian.
She is a Senior Programs Officer and works in the Trust Accounts Program Division which is part of the Taxpayer Services and Debt Management Branch.
It is a pleasure for both of us to participate in this webinar today.
My portion of the webinar will deal with the legislative provisions of Bill C-51, whereas Dian will be dealing more with the administrative provisions of these amendments.
We'll start our webinar on page 3, which is entitled Today's Topic.
As stated earlier, today's webinar will be on Bill C-51, the Economic Recovery Act, the Stimulus.
Within Bill C-51 there were amendments to the Canada Pension Plan, the CPP, and we will be discussing those amendments that deal specifically with the working beneficiary and the CPP contributions.
We should first discuss who will be affected by these working beneficiary amendments.
These changes will apply to you if you are an employee or self-employed and if you are 60 to 70 years of age and you are receiving a Quebec Pension Plan, that's a QPP, or a Canada Pension Plan, a CPP, retirement pension.
And the amendments will apply to you if you are an employer of an employee who is so affected.
Now, those workers who are not subject to the CPP, for example, Quebec employees, will not be affected by these amendments.
The legislative changes that we're discussing today have a coming into force date of January the 1st of 2012.
We're now at Slide 4.
This slide highlights the principle changes to the CPP pursuant to Bill C-51.
As of January the first of 2012, individuals who are working and receiving a CPP or a QPP retirement pension and who are 60 to 65 years of age, will be required to contribute to the CPP.
This means that CPP contributions are mandatory even though they are in receipt of a CPP or a QPP retirement pension.
Those individuals who are working and who are in receipt of a CPP or a QPP retirement pension, who are at least 65 years of age, but under 70, can elect to stop contributing to the CPP.
But, unless they elect to stop contributing to the CPP, they will be required to contribute as well.
Also, those individuals who are at least 65 years of age, but under 70, who elected to stop contributing to the CPP can revoke that election in a subsequent year.
This means that in a subsequent year an individual who elected not to contribute to the Canada Pension Plan can revoke that election and start contributing to the CPP once again.
So, those are the principal changes to the CPP.
We're now at Slide 5 which is entitled, Terminology.
There are a few terms that we should explain as both myself and Dian will be using these terms throughout our presentation, and the first one is elect/election.
To elect means that an individual has elected to stop contributing to the CPP.
If they do not make an election, then they must contribute.
To revoke means that an individual is revoking a prior election and is indicating that he or she wants to start contributing to the CPP once again.
We're now on Slide 6 Election to Stop Contributing and Revoking of a Prior Election.
Only individuals, employees, and self-employed persons can file an election or a revocation.
The election or revocation must be made in the prescribed form and manner.
Before continuing our discussion on the legislative amendments, dealing with the election and revocation, and what prescribed form and manner means, I'd first like to talk about the election forms.
Now, the CRA has developed two distinct election forms, one is for individuals whose income from employment consists solely from self-employed earnings and that form is Schedule 8 and it is entitled CPP Contributions on Self-Employed and Other Earnings.
Schedule 8 is the prescribed form for an individual whose income for employment for a calendar year consists solely of self-employed earnings.
The other election form is the one that an employee would complete and give to their employer or employers, and that form is CPT-30 and it is entitled An Election to Stop Contributing to the Canada Pension Plan or a Revocation of a Prior Election.
An individual who has both self-employed earnings and employment income would have to elect using form CPT-30, as a Schedule 8 form is reserved for those individuals whose income from employment consists of self-employed earnings only.
So, if you were an employee, at any time during a particular calendar year, the prescribed form is a CPT-30 and the prescribed manner is for the employee to give a completed copy to their employer.
We continue on with the third bullet on Slide 6.
An employee's election, that's the CPT-30 form, will take effect on the first day of the month following the month in which it is made.
An employee's election will cease to have effect on the first day of the month following the month in which it is revoked.
Continuing on with the legislative provisions on Slide 7, an election may be made only once in a calendar year.
An election to stop contributing to the CPP and a revocation of a prior election cannot be made in the same calendar year.
Such an election applies to the person's income from all pensionable employment and with respect to self-employed earnings.
I'd like to draw your attention to this last bullet.
There are two points I'd like to discuss in more detail.
The first point is the election is deemed to be an election for the individual's entire pensionable employment.
This means that it applies to that individual's employment, all his employment.
Therefore, that employee cannot pick and choose which employers they will file the election with, and this principle applies to the revocation as well.
They cannot pick and choose.
They will file the election or revocation with all their current employers.
The second point is that this election applies not only to the individual's employment income, that's his T4 earnings as an employee, but it also applies to his self-employed earnings, if he happens to have any.
The next slide is Slide 8.
It's entitled CPP Working Beneficiary Amendments and the Self-Employed.
The CPP Working Beneficiary amendments for the self-employed worker are very similar to the amendments that apply to employees.
The self-employed worker in receipt of a CPP or a QPP retirement pension has to contribute to the CPP until at least 65 years of age.
The self-employed worker in receipt of a CPP or a QPP retirement pension, who is at least 65 years of age, but under 70, can file an election to stop contributing to the CPP and may revoke that election in a subsequent calendar year.
And as mentioned earlier, an individual whose income from employment consists solely of self-employed earnings would elect or revoke using Schedule 8.
We'll now turn to Slide 9 entitled December 2011 Interim Measure.
If in December of 2011 an employee who is at least 65 years of age and in receipt of a CPP or a QPP retirement pension and does not want to start contributing to the CPP as of January the first of 2012, then that employee should make his election to stop contributing to the CPP by providing a copy of the completed and signed CPT-30 election form to their employer or employers in December of 2011.
If no election is filed in December of 2011 the employee will contribute to the CPP as of January the first 2012.
Employers should keep a copy of the election for their records and for possible future use, and send the original CPT-30 to the CRA as of December 2011, as well.
Since the legislation has only a coming into force date of January the first of 2012 the CRA will, with respect to a revocation, consider any CPT-30 election forms made in 2011 as a 2012 election and thus, no revocations can be filed prior to January the first of 2013.
As mentioned earlier, only one such election can be made in a calendar year, so any elections made in December, 2011 are going to be considered a 2012 election and therefore a revocation cannot be filed until 2013.
Please note that an employee who is in receipt of a CPP retirement pension, but only turned 65 years of age in January of 2012 will have to wait until January of 2012 to make his election to stop contributing to the CPP.
He would not be eligible to file his CPT-30 election in December because he is not at least 65 years of age in December.
At Slide 10, How do Individuals Elect or Revoke This is basically a re-cap of what has just been stated.
So, individuals who have employment income, that's T4 income, or both employment income and self-employed earnings in the same calendar year, they would complete form CPT-30, which is available on CRA's website.
And they would give a copy of the completed and signed election form to their employer, or employers.
This is the prescribed form and manner for an individual who had employment income, that's T4 income, in a particular year that wants to elect or revoke.
The election/revocation takes effect on the first day of the month following the month in which it is made, and that means filed with their employer.
Individuals with self-employed earnings only, that means there's no T4 income, they would complete Schedule 8, CPP Contributions on Self-Employed and other Earnings, and file the completed form with their Income Tax and Benefit Return for that particular year.
This is the prescribed form and manner for an individual who did not have employment income, T4 income, but rather only self-employed earnings in a particular year to elect or to revoke.
The election takes effect on the first day of the month indicated on Schedule 8.
We're now at Slide 11, The Prescribed Form and Manner and Form CPT-30 .
As mentioned earlier, the CPT-30 is the prescribed form for an employee to complete if they want to elect not to contribute to the CPP, or if they subsequently wish to revoke a prior election and start contributing to the CPP once again.
Now, if you printed out a copy of the CPT-30 election form, take it out now and it might be easier to follow along because I'm going to start describing the CPT-30 form itself and it would probably be easier to follow along with my comments.
There are four sections within the CPT-30 that I'd like to briefly discuss.
Section A is the identification area.
This is the employee simply completes the section by recording their name, date of birth, address and their social insurance number.
Section B is the eligibility area.
This section simply helps the employee self-identify if they are eligible to file the election or a revocation.
Section C is the election and certification area.
This is where an employee certifies that he is eligible and wishes to stop contributing to the CPP, and that he will provide a copy of the completed election form to their employer or employers by the end of the month reported next to the employee's signature in section C.
Section D is a revocation and certification area.
This is where an employee certifies that they are eligible and wish to revoke a prior election to stop contributing to the CPP, and that they will provide their employer or employers with a copy of the completed revocation form by the end of the month reported next to the employee's signature in section D.
Now, this concludes the legislative portion of this presentation.
We're going to stop for two to three minutes and I'll return at that time and will answer the questions that you've submitted, and subsequent to that, Dian will follow through with her portion of the presentation.
So, we'll see you shortly.
Welcome back, everyone.
We have a few questions received that we would like to answer now.
Cheryl asked, Do self-employed submit CPP and double the amount, employees contribute CPP and employer submits the same amount.
Do the self-employed submit twice the amount And the answer to that is yes.
The self-employed would complete Schedule 8 and just walk through that form and it will tell you calculations and then they have both portions.
So, that is Cheryl's question.
We have another question.
We have an employee who's currently exempt from CPP contributions as she is receiving CPP pension.
She is a widow.
She is 63 years old.
Will she be required to begin CPP contributions in January Well, if you are currently receiving a CPP pension, the pension we're talking about is the CPP retirement pension.
The legislation in Bill C-51 addresses the CPP or QPP retirement pension, not the Disability pension for example.
So, if an individual was receiving a Disability pension, they're still exempt under the new legislation.
Another question, Heather asked -- this question, there's quite a few people asking this question.
I applied for my Canada Pension Plan at age 60 -- received my first payment in October, 2010.
They explained that I would be grandfathered and the new rules of 2012 will not affect me and I would not be required to pay CPP as I continue to work.
Well, unfortunately, there are no grandfathering provisions in this legislation.
If you are in receipt of a CPP or a QPP retirement pension, you are working, and you're 65 years of age or younger, CPP contributions are mandatory.
If you are at least 65 years of age and older, you may elect not to contribute, but if you don't file that election not to contribute, contributions will be required.
There are no grandfathering provisions, unfortunately.
There's one more question here that I'll answer.
This is from Marie, Do we need to get an election filed for an employee who is over 65 years and getting CPP for either to start CPP contributions or electing for no CPP contributions Well, yes, Marie, you're going to have to have this individual that's over 65 years of age submit an election in the CPT-30 Form to stop contributions.
If that form is not given to you as an employer, then you are required under the legislation to deduct CPP contributions from this individual who happens to be in receipt of a CPP retirement pension.
So yes, if no election is filed then CPP contributions are required.
I'm going to turn the mic over to my colleague, Dian, and we'll follow up with questions at a later date.
Dian Thank you, Terry.
Hello and welcome.
I'm going to talk to you today about how to administer the legislation that Terry just reviewed.
I will be focusing on the election and revocation processes for employees who are eligible to file these forms.
And these are those employees who are 65 to 70 years of age and in receipt of either a CPP or QPP retirement pension, as Terry indicated in his part of the presentation.
Since employees can start filing election forms this month, the first part of my presentation will be about those forms.
I'll be discussing the responsibilities of the employee, employer, and the CRA, and we'll have a few examples just to try and put all of that information together.
After the examples we'll have a question and answer period, after which the second part of my presentation will be about the revocations.
So, that is where you'll learn when to start deducting CPP again.
Education and communication are the keys to making this process work as smoothly as possible.
You need to educate yourself as employers so that you can, in turn, provide that education and set up processes and policies and communication strategies within your organizations for your employees.
Only you know how best to communicate the information to your employees.
We are providing this webinar, of course, and thank you for signing up for that.
Go to our website.
We have a lot of really great information on our website about the changes to the Canada Pension Plan.
In our employer publications that will be coming out in January, there is what's new information.
The material will also be updated to show the most current information.
This piece of legislation makes the decision of whether or not to contribute to the Canada Pension Plan, the employees to make, but once that employee decides that they want to stop paying into the Canada Pension Plan, it will be up to employers to make sure that that happens.
So, any employee that you have working for you who decides that they don't want to have are CPP deducted from their pay checks any further, it will be up to you, as employers, to make sure that you're following what their wish is.
Since you are the ones responsible for administering this legislation, it's important that you make sure that your employees understand what is expected of them and by when.
You might want to include information in a hiring package, if you hire older workers, maybe send out an information letter or a targeted mail-out if you have employees between 60 and 70 years old.
Do what you can.
The last thing that I'd want for you is to be in a situation where you should be deducting CPP and aren't.
Let's go to Slide 12 now and look at the overall general eligibility requirements for filing an election.
An employee can stop paying CPP contributions if he or she is eligible and files an election form with an employer.
The eligibility requirements shown in the bullets on this slide are the same as the questions that are in part B of the CPT-30 election form that Terry reviewed earlier.
These questions will help the employee determine if they are eligible to stop paying Canada Pension Plan contributions.
It should also prevent employees from completing the form unnecessarily.
These are questions that the employee has to answer yes or no to.
If they come across a question that's a no , that means they're not eligible to file the election form.
They have to wait until they can answer yes to that question.
Another thing that's really important about the election is that it can only be completed and filed by the employee.
Let's look at the employee's responsibilities now.
There are a number of things that the employee has to do.
First and foremost, the employee has to make sure that he or she is eligible to stop paying contributions.
The employee has to decide when to stop paying.
This is their decision and will likely be based on their financial position at the time.
Since continuing to pay CPP contributions can increase the amount of a retirement pension that individuals receive from Service Canada, they need to decide how much in contributions they pay, what the effect of the benefit is going to be.
Employees and individuals alike can contact Service Canada to get that information and become educated in that regard.
Once the employee makes the decision when to stop paying CPP contributions, they would complete parts A, B and C of the form.
The election will be effective the first of the month following the date shown in Part C.
The employee can only complete one election and file it with an employer.
As Terry indicated, if the employee does not file an election with an employer, the employee has not elected.
So, I just wanted to reiterate the part that the employee can only complete and file one election because that's going to be a very important component.
The election remains valid so that one election that the employee files with the employer remains valid until it is revoked by that employee in a future calendar year.
Some other responsibilities for the employee on Slide 14.
The employee has to give a copy of the election form to all current employers before the end of the month shown by them in Part C of the form.
The employee should also provide the employer with documents showing proof of age and proof of receipt of the CPP or QPP retirement pension.
This could include a copy of an award letter that was received from Service Canada.
The employee has to send the original election form to the Canada Revenue Agency, but only after providing a copy of that form to the employer.
This should be done as soon as possible.
The employee should keep a copy of the election form for his or her records for future reference.
This is the one election form, any future employers that that particular employee works for needs to know not to deduct CPP contributions, and the only way that that future employer will know is by having the employee produce a copy of that election form and give it to them.
Let's look at employer responsibilities now.
If you don't receive an election form or a copy of an election form from your eligible employee, you have to deduct CPP contributions from their earnings, even if they tell you otherwise.
For the next two bullets, think of this as being the ideal situation where you have an employee working for you who wants to make an election to stop, has completed the form and is giving it to you.
When you receive the completed form from your employee, make sure the months shown by the employee in Part C agrees with the month in which you actually received the form.
If the date is different it must be changed.
Please make sure the employee changes the date before sending the original form to the Canada Revenue Agency.
This ensures that we're both operating off the same date.
The legislation does not allow an employee to file a post-dated form.
However, an employer's payroll requirements may be such that having the employee file the form a little bit early is not unreasonable.
Employers could consider their pay period cut-off in coming up with a policy or a timeline for employees filing election forms.
I don't want to confuse things right now talking about multiple employers, but I will before we go on to the next slide.
Once you receive the completed election form, you will stop deducting CPP contributions, the first pay in the month following the month shown by the employee in Part C.
Up until this slide we've been talking about the effective date of the election, that being the first of the following month, but we know most payrolls do not stop or start at the end or the beginning of a calendar month.
We don't want to interrupt your normal pay period frequency, so as a result, in order to begin stopping the Canada Pension Plan contributions it will be the first pay in the month following the month that you receive the form from the employee.
There is a little step, though, that you have to do as the employer, and that's to prorate the employee's maximum CPP contribution for the year, just to make sure that you've not deducted more than what you should have, based on their pensionable earnings.
This isn't something that's new.
This is something that you should already be doing for those employees that you have working for you who turn 18 during the year or turn 70 during the year.
There is a proration that needs to happen just to double-check that you have not deducted more than what you should on those pensionable earnings.
Keep a copy of the form for your records.
Also, keep with that form any documentation such as the award letter from Service Canada.
And then finally, do not deduct CPP contributions from those employees' earnings until that employee, in a later calendar year, provides you with a revocation, signalling that they would like to start paying CPP contributions again.
Just to get back to that election and the date on the election, there may be instances where you are not the employer that the employee is making the election with.
The employee could have worked for another employer in the past and gave that election at that point in time.
So it is possible that you, being the second or subsequent employer receive a copy of an election form that has a date that's in the past.
You should have a conversation with the employee, just to confirm that that, in fact, is the one election that the employee filed, that that's the valid election.
That's really what you want to know, is that a valid election And if it is, then you can put it into use.
If you found that you've deducted CPP contributions from employees' wages after the date that's shown on that election form, then another process that is already in existence today is simply reimburse your employee for the CPP that was deducted in error, and then you can reduce your next remittance to the Canada Revenue Agency by the employee and employer portions.
Continuing on to Slide 16 now, let's take a look at how to complete the T4 Slip.
You will complete your T4 slip for your employees in the usual way, but pay special attention to boxes 16, 26 and 28.
The CPP deducted in box 16 and the pensionable earnings in box 26 should relate to the period up to and including the end of the month before the election became effective.
This is your pensionable period of time.
Box 26 will contain those prorated pensionable earnings, which I talked about on the previous slide.
It's important to leave box 28 alone, do not put an X in there since the earnings are not exempt, they are only excluded from pensionable earnings.
Slide 17 CRA responsibilities.
When the CRA receives a completed election form from the employee, we will process it.
We will key the date and have that date on our system.
Again, the date that we will use for purposes of any post-assessing-type programs, for lack of a better word, will be the first of the month following the month that's shown by the employee in Part C.
So Part C, the date in there becomes a really important date because we'll use the first of the following month.
On a previous slide and on the CPT-30 itself we have asked the employee to send the completed original form to the CRA.
If we receive a copy, however, we will keep it and process it as though it were original.
The Canada Revenue Agency will keep the forms on file for six years.
If in the event that an employee may lose a copy, can't find a copy of the form in a later year, they could simply write into the CRA and ask for a copy to be provided.
That's why we would prefer to have the original because in a few years copies tend to deteriorate over time, and for us to provide a photocopy of an original just means the quality would be that much better.
When we receive the T4 slips, we do a calculation to make sure that enough CPP and EI contributions have been withheld based on the earnings reported on the T4 slip.
Some of you may not know that in January 1, 2012 for the 2011 reporting year, completion of the EI Insurable Earnings, box 24, and the CPP/QPP Pensionable earnings, box 26, are now mandatory.
They have to be completed in all instances, even if they're the same as box 14.
So, this is a little bit of a departure from what you might be used to, but we are making these mandatory boxes to complete.
When your T4 slips come in, what we do is we perform a calculation to make sure that the amount of CPP and EI that have been deducted, as reported on the slip are, in fact, sufficient amounts.
If there are any deficiencies that are detected, we will list them on a pensionable and insurable earnings review and that will go out to the employer asking for an explanation.
If the result of this calculation shows that the amount of CPP or EI is what it should be, less than or equal to the contributions showing on the slip, then no further action will be taken.
When an individual's personal tax return comes into the CRA, we will use the effective date to determine if there is any excess CPP contribution.
Let's look at a few examples now, starting at Slide 19.
Example 1 Ann is eligible and files an election to stop paying into the CPP on March 15, 2012.
She gives a copy of an election form to her employer and sends the original to the CRA.
Can she change her mind later that year and revoke the election The answer, on Slide 20 no.
Ann cannot revoke her election in the same year that she filed the election.
The earliest that Ann can revoke the election that she previously filed will be January, 2013.
And this is true even if Ann took advantage of the December 11 interim measure, because we deem the election to have been filed in 2012, that reinforces what Terry had said about January 2013 as being the first time that an employee can revoke an election.
Example 2 Yan works for three different employers during the year.
Does he have to file a separate election not to contribute with each of his employers Answer No.
There is only one election form, and one effective date.
Once the employee completes the form and files it with an employer, any employer, that's the date and everyone has to be committed to that date.
Yan must file his election with the first employer, but every other employer that he works for currently or every employer that he may work with in the future receives a copy of that one form.
Example 3 ABC Company hired a 67-year-old employee in March, 2014 and started deducting CPP.
In that same month the employee gave ABC an election to stop deducting CPP, which was effective April the first, 2014.
In May, the CRA returned the election form advising the employee that a previous election had been filed in October, 2012 and that election was still valid.
The employee spoke to his payroll officer about this situation.
What should ABC Company do And the answer, on Slide 24 The election form filed by the employee in October, 2012 is valid.
So, you can see this is a good illustration of there being that one form and that one date and everything else is just copies.
ABC Company, in this instance, is going to destroy the election that they received in March of 2014, ask the employee to provide them with a copy of the valid election showing the October, 2012 date.
Because the employer deducted CPP contributions from the employee in March of 2014, the employer can simply, in the next pay, reimburse the employee for those deductions that were taken in error and reduce their next remittance to the Canada Revenue Agency by the employee and the employer portions of those deductions.
This concludes the presentation on elections.
We will now have a two to three-minute break and then come back and answer some of your questions.
Yes, well welcome back.
We have several questions here.
A few I will answer and Dian will answer the majority of the questions.
We have one question from Dave, and this is indicative of several other individuals.
It states, We have an employee, who turned 65 in January, 2012.
The employee has applied for CPP benefits, which will be starting in February of 2012.
She wants to stop CPP contributions.
When should she submit the CPT-30 form Well, the first thing we need to confirm is that the CPP benefits that you're referring to in your question are CPP retirement pension.
The individual, the employee, would have to wait until she's in receipt of a CPP retirement pension and is at least 65 years of age in order to elect not to contribute.
When we say in receipt of a CPP retirement pension, that is being in receipt of the award letter indicating that as of February, in your example, that this employee would be in receipt of the pension.
That would be sufficient.
Another question asked by Michael, Are there any increases to the contribution and/or the maximum earnings -- an employee's maximums Well, that's a little bit off the topic but no, there's been no changes in the maximum earnings with respect to this legislation.
Another question from Dee Dee If an employee is receiving two employment incomes, one pensionable and one non-pensionable, will the employer now be obligated to deduct CPP on the non-pensionable part of the employee's income And the answer to that is no.
There's been no changes to the types of income that are subject to CPP.
We have a question from Renata.
She states, I had our employees fill out the CPT-30 form in October of 2011.
Do they need to change the election date to December of 2011 Well, no, Renata.
That won't be necessary.
Any elections filed in 2011 are going to be considered as a December 2011 election, and providing that those individuals were eligible to elect not to contribute in 2011, it will be applicable as of January the first, 2012.
So, those are the questions that I'm going to answer.
Now I'll hand it over to Dian who will answer the rest of the questions.
I have a question here from Donna.
She's asked, If you do not advise your employer that you have revoked, who is responsible for paying the employer's portion of the Canada Pension Plan contributions If you have revoked and you have not advised your employer of such, what I'd like to do is just have you wait until I present that part of the presentation.
If you do not advise your employer - let's say that you haven't actually revoked, then there is no additional CPP contributions that would have to be paid because the election means that you want to stop.
So the revocation, just wait till I go through the second half of my presentation and I'm sure you'll get your answer then.
Kim asked, What would happen if the employee hands the employer a form -- an election form, I'm presuming, but does not end up sending the form to the Winnipeg Tax Centre That's a good question, because in reality that's something that could happen that the employee forgets to send in the original form to the CRA.
What would happen in that instance is that there could be some discrepancies in the T4 slips as they come in, and are being scanned for deficiencies.
When the T4 slips come in, we'll check the effective date against the prorated pensionable earnings that are showing in box 26 of the T4 slip.
There's going to be a deficiency detected because we won't have an election effective-date showing on our system.
And that's not such a big deal.
All you do is if that employee's T4 slip is listed on the pensionable insurable earnings review PIER , simply respond to that PIER printout and provide a copy of the employee's election.
Then we'll send that for processing and we'll make sure that that election effective-date gets put into the employee records.
Arlene asked, If the employee is between 65 and 70, can he receive a pension and make contribution to CPP at the same time I'm assuming that the pension that Arlene is asking about is the retirement pension.
And the answer to that is yes.
These are the people that are affected by the new legislation.
The legislation is a continuation of contributions for any employee who is 60 to 70 years of age, even if they are in receipt of a CPP or QPP retirement pension.
The only time that they can stop paying into the Canada Pension -- that they can stop having CPP deducted on their employment earnings, is if they're 65 years of age and file an election form with the employer.
John asked, I am 65 years old and employed.
I have not applied for CPP benefits, choosing to delay and receive larger monthly benefits when I retire.
Will I be required to contribute to the CPP in 2012 And the answer is yes.
You would contribute until you turn 70.
Colleen asked, If an employee changes employers and have misplaced their copy of the CPT-30, how do they provide proof to their new employer Can they request a copy of their CPT-30 election form from the Canada Revenue Agency And the answer to that is yes.
Any employee who has misplaced the form or has lost the election form that they have given to their employer or sent in to the CRA can request at any time the CRA provide a copy of that form.
This might be a good time just to confirm a few other things about the CPT-30.
This form cannot be completed and filed online.
We need to have it sent in in hard copy so that we have the employee's signature on it.
This becomes part of the individual's records with the CRA and as such, we're unable to provide copies of these completed forms to anybody other than the employee -- other than the individual involved.
We do not confirm receipt of these forms, although we do keep them on file for six years.
Let's move on now to the second half of my presentation where I will be talking to you about revoking.
An employee can start paying CPP contributions again if they are eligible and revoke their election.
I'm not going to spend as much time going through the revocation slides because you'll see as we go through it there's a lot of information that is quite similar, but what I will do is stop at certain points and just discuss with you some of the principle differences.
When an employee wants to start paying CPP contributions again, they have to file a revocation with the employer, and that's a CPT-30.
It's the same form.
It's just a different part that's completed.
The eligibility requirements that are on the slide, is that in Part D and it's in the question format.
Again, this form can only be completed and filed by the employee.
Slide 26 Employee's responsibilities.
When employees revoke an election they filed in a previous year, they really are changing their mind.
They've decided, for personal or financial reasons, that paying CPP contributions again is in their best interests.
The form is the same, but employees will complete parts A, B and D of the form this time, if they are going to revoke a prior election, and as shown in Part D of the form, the revocation becomes effective the first of the following month.
So, the effective date for both the election and revocation is always the first of the month following that shown in Part D.
As with the election, the employee can only complete and file one form.
So again, you have one form, one date, and everything else hinges on that one date.
The employee cannot elect until a future year, as well.
Continuing on Slide 27, more employee responsibilities.
The employee has to give a copy to all employers before the end of the month shown in Part D of the form.
Send the original to the CRA once they have made that election and keep a copy for their records.
The legislation is such that the filing of a revocation, the eligibility requirements aren't so stringent on employees who are filing a revocation, and that's because in order to revoke an election they had to have filed an election to begin with.
Slide 28 Employer's responsibilities.
As I go through the first couple of bullets on this slide, again, please put yourself in that ideal scenario where you have an employee.
That employee has given you an election, you've accepted the election, and now the employee has decided that they want to start paying CPP contributions again and they've completed a revocation and are now giving it to you.
When that employee gives you the revocation, make sure that the date shown in Part D of the form agrees with the date in which you receive it.
We ask that you again respect the date that the employee gives you, it could be because of your pay period cut-offs and timelines that you require that to be filed a little early.
You would start deducting CPP contributions the first pay in the month following the month shown by the employee in Part D, and you would continue to deduct CPP until that employee either turns 70, files another election with you to stop paying into CPP contributions again, or stops working for you.
There's the prorating of the CPP maximum that you would have to do as well, similar to what you would have done for an employee who's 18 or 70.
That's much of what I had talked about on the election part of the presentation, and you would keep a copy of the form for the employee's records.
One thing that I would like to just spend a little bit more information on is the actual date.
We've been saying all along the effective date is the first day of the month following - and with the elections the date that the employee files the election, the actual date that the election becomes valid, is going to be the date that employers will use to determine whether or not they've deducted CPP in error and should be reimbursing their employee and reducing their next remittance.
With revocations, that's a little bit different.
Even though the employee will revoke an election, there is a single form and a single date.
We will not make an employer who was not presented with revocation in the month that is noted in Part D of the form to be responsible to pay the CPP contributions that should have been deducted from a previous date.
So, in other words, for those employers who receive a Part D revocation that shows a date in the past, the effective date for starting to deduct CPP contributions from your employee's pay will be the first pay in the month following the month that you actually received the form.
And you might want to make a note of this on the form, on the back of the form, there's some space, in the event that that comes up at a later time.
The employer's responsibilities for T4 slip preparation is exactly the same as what they are for preparing T4 slips for the elections.
The only difference is that the prorated pensionable earnings that are showing in box 26 will be those earnings from the effective date until the end of the calendar year.
CRA responsibilities are pretty much the same as what they were for the elections.
We're going to receive the form.
We'll key the date.
We'll have that on our system.
We'll keep the forms for six years.
We'll review any T4 slips that come in to check and make sure that nothing is deficient.
If there is a deficiency we'll list that on a pensionable and insurable earnings review and send that out to the employer and ask for an explanation.
And as well, we'll use that effective date when an individual files their personal tax return to see if there's any excess CPP contributions.
Let's look at a few examples now before we have our final question and answer period.
In 2012 Keona filed an election to stop contributing to the CPP.
In May, 2013, the following year, Keona decided to start paying CPP again.
She completed a revocation form and gave it to her main employer.
In July, she gave a copy to her part-time employer because she forgot to do that in May.
Should her part-time employer retroactively deduct CPP from June first, 2013 or deduct CPP contributions starting August the first, 2013 Now, if we assume that this employer has a monthly payroll that starts on the first of the month, then, you know, we otherwise think of this as being the first pay in June or the first pay in August.
The answer to that, slide 33, is Keona's part-time employer would deduct CPP as of August, 2013.
Her part-time employer is not responsible for any CPP that should have been deducted in June or July since this employer has not received Keona's completed election revocation form before that point.
Now, part of the legislation is that Keona can, if she chooses to, contribute to the Canada Pension Plan on her own for those pensionable earnings in June and July by filing a special election form with her personal income tax return.
By filing that form, by not having told her employer sooner about the revocation, it means that Keona will have to remit both the employee and employer portions of the CPP with her individual income tax return.
Example 5, slide 34 Maya elected to stop making CPP contributions in February, 2013.
In November, she prepared a revocation form, but did not give her employer a copy of that form until January, 2014.
Does her employer start deducting CPP the first pay in February, 2014 December's pay in 2013 Or with the first pay in February, 2014 and retroactively recover CPP contributions for December and January's pay Slide 35.
The answer is that the revocation can only be valid in 2014.
The employer will only start deducting CPP again once they know about the employee's wish.
So, in this particular case, because the employer did not know that the employee wanted to start making CPP contributions again until January, 2014, the soonest that the employer would have to start deducting CPP is February the first.
Maya, could, if she wanted to, contribute to the CPP on her December and January earnings by filing that CPT-20 election form with her personal income tax return.
Our final example, Raaj is 63 years old and has both employment and self-employed earnings.
Can he file an election to stop contributing to the CPP on the income earned from his employer only Slide 37.
The answer is no.
Raaj is under 65 years of age and he is not eligible to file an election.
He only becomes eligible once he turns 65 years of age and is in receipt of a CPP or QPP retirement pension, and as Terry had indicated at the start of the presentation, once an individual files an election, it applies to both earnings from employment, so that's your T4 income as well as your self-employed earnings.
So, nobody can choose which type of income to stop paying the CPP contributions on.
CPP will not be paid on either employment or self-employed earnings.
On this slide, 38, it's just a little bit of a checklist what employers should remember.
Make sure you know you're employee's age.
Ask for proof if the employee says that they are in receipt of a CPP or a QPP retirement pension.
Ask the employee if they have previously filed an election with another employer to stop contributing.
You need to know.
You need to just do your due diligence when you receive an election form or a revocation form to make sure that the employee is eligible.
You don't want to be caught in a situation where you should have deducted and didn't.
This concludes our presentation.
We will now take a break for two to three minutes and then return for a final question and answer period.
Well, welcome back.
We have a few additional questions that we'd like to address.
I'm going to address the first couple and then we'll pass it over to Dian to finalize the presentation.
I have a question from Lorraine.
She asks, If you are between 60 and 65 and receiving a CPP disability pension, do we still deduct CPP Well, Bill C-51 talked about CPP and QPP retirement pension.
The legislation did not amend sub-section 12 1 b which deals with disability.
So 12 1 b is still valid and that indicates that if you are in receipt of a CPP or QPP disability pension, then that income that you earned during the months that you're in receipt of that disability do not form part of your pensionable earnings.
So, no contributions were required.
So, this individual at any age that's in receipt of -- well, I think up to age 65, receiving disability, would not have to file an election not to contribute.
However, I believe the disability pension all turns into a retirement pension at the age of 65, so from 65 on, if she's not receiving disability and it's a retirement pension and classified as such by HRSDC, then at 65 she would have to file the CPT-30.
So, that was a good question.
Thank you, Lorraine.
I have a question here from Kim, and others have addressed this question as well.
Individuals who are not yet receiving their CPP benefits but are 65 years old.
For example, my client turned 65 in September and had just applied to start receiving his CPP benefits at the age of 65.
He is not yet receiving CPP, but has applied.
Can we file his CPT-30 election when he starts receiving his CPP pension or now Well, the response is the employee can only file the CPT-30 once he reaches the age of 65 and is in receipt of a CPP or QPP retirement pension, so he can't file it now.
However, if he's in receipt of a CPP award letter stating that as of this particular date CPP pensions are going to be available, then as of that date that this award letter indicates, then in that month he can file an election not to contribute.
He doesn't actually have to have received a check in hand to be in receipt of the CPP pension.
We'll consider the award letter indicating that particular month, that month is included.
So, that was Kim's question.
Cheryl asked, Do self-employed submit CPP in double the amount Employees contribute CPP and the employer submits the same amount.
Do the self-employed submit twice the amount Well, in reality, yes they do.
Richard asks in the same manner, How do we get a copy of Schedule 8 Well, Schedule 8 has always been available.
However, we need a new Schedule 8 for the election process for Bill C-51 and that form is not currently available to the public.
A self-employed individual is going to complete Schedule 8 and file that when he files his 2012 Income Tax Return, which would be sometime in 2013.
Now, Schedule 8 is going to be available prior to that, but you do not have access to it, and as I've mentioned earlier, Schedule 8, you would complete that, calculate the amount that you would pay and you would indicate the month that you would you want to stop paying in 2012.
If you were 65 and in receipt of CPP in all of 2012, then you could stop contributing as of January, and that would be the effective date.
Now I'll turn it over to Dian for the final questions.
Several participants have asked us to clarify whether an election or a revocation form must be filed annually, and the answer is no.
There's only one election and one revocation.
There's only one date for each that the employer has to use and be aware of.
Once the employee files an election with an employer, that becomes the valid election and the date that that occurs in becomes the valid date.
Tina has asked, and this is a really good question, The pay period goes from January the 22nd and ends the 4th of February with a pay date of February the 9th.
The February 9th date covers earnings for January.
We receive a CPT-30 form before the end of January.
Would I start deducting, or stop deducting CPP contributions Well, the answer to that depends on what the employee has presented you in terms of the CPT-30.
If the CPT-30 that the employee is giving you in January indicates that they want to stop contributing to the Canada Pension Plan, then that February pay date will not have any CPP contributions deducted on that payroll.
If, on the other hand, the CPT-30 form that you receive from the employee in January indicates that the employee wants to start paying CPP contributions again, let's fast-forward and say that this is January 2013, then that first payroll in February would have CPP contributions deducted on it.
It's the prorating of the maximum contribution for the year that's going to be important, and this is a really good illustration of that.
We transmit information over to Service Canada based on pensionable months, so that's why the prorating needs to be done, because the prorating helps to put the CPP pensionable earnings and their contributions into the perspective of a monthly basis so that when the T4 slips are prepared at the end of the year and the pensionable earnings, the prorated earnings are showing on the T4 slip in box 26 and that information gets transmitted over to Service Canada, it will be transmitted correctly because it'll be based on the pensionable months.
Herb has asked, To revoke effective January, 2013, must you wait until January first 2014 Doesn't that mean a February first effective date And the answer is yes.
The first time that an employee can revoke a prior election will be January the first, 2013, and because the effective date is the first of the following month, Herb, you are correct by saying that the effective date would be February the first.
If you were an employer who had to start withholding CPP contributions again, what that means to you is that in your first pay, in that employee's first pay in February, is when CPP deductions would start again.
JoAnn has asked, Do employees over 70 need to complete any paperwork No.
The current legislation, and even the new legislation, there's no changes to anybody who's over the age of 70.
CPP contributions are not required for individuals of that age.
Thank you for participating in this webinar.
We encourage you and your employees to visit these websites to find out more information.
The first web link that we've provided you is for employers.
There's a lot of really good information there, and hopefully it should answer almost all the questions that you might have today.
There is more information about receiving an election form that's dated in the past or revocation that's dated in the past and what do I do if my employee files a post-dated form or situations when you should not accept a post-dated form.
So, we've tried to think of as much information and situations as we can that might present themselves to employers as we move forward and start having to administer the legislation in January and February and on into the new year.
The next link is for individuals.
So, they'll find information mostly for employees about what they need to do.
Within each of these links, of course, there's going to be links to the Service Canada website and any individuals who are wondering, Why do I have to pay extra CPP contributions What's the effect going to be on my retirement pension They should go to the Service Canada website, look at the information there, get in touch with a Service Canada agent to help walk you through what impact the additional contributions are going to make.
Maybe that's the reason why you choose a date that's later than when you're 65 to actually stop paying CPP contributions, but the more that we can educate, the more that you can self-educate or provide your employees with information, the better that this process is going to be for all of us.
Thank you for joining us again.
If you want to see this presentation again or would like to share it with your colleagues, it will be available on the CRA website in the New Year.
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