Calculating CPP contributions
You have to deduct CPP contributions from your employee's pensionable earnings. As an employer, you must contribute an amount equal to the CPP contributions that you deduct from your employees' remuneration.
Each year, we provide the maximum pensionable earnings, the year's basic exemption amount, and the rate you use to calculate the amount of CPP contributions to deduct from your employees' remuneration. For more information, see the CPP contribution rates, maximums and exemptions chart.
CPP contributions you deducted from your employee's salary in the month ($240.40) + your share of CPP contributions ($240.40) = Total amount you remit for CPP contributions ($480.80)
You stop deducting CPP contributions when the employee's annual earnings reach the maximum pensionable earnings or the maximum employee contribution for the year ($2,593.80 for 2018).
The annual maximum pensionable earnings ($55,900 for 2018) applies to each job the employee holds with different employers (different business numbers). If an employee leaves one employer during the year to start work with another employer, the new employer also has to deduct CPP contributions without taking into account what the previous employer paid. This is the case even if the employee has contributed the maximum amount during the previous employment. If your business went through a restructure or reorganization, see What should you do if your business goes through a restructure or reorganization, or amalgamates?
If you pay an amount to a former employee and you have to deduct CPP contributions, use the current rate in effect when you make the payment.
Any overpayments will be refunded to employees when they file their income tax and benefit returns. However, there is no provision in the CPP that would allow us to refund or credit the employer for his or her contributions in those circumstances.
Employment in Quebec
Quebec employers deduct QPP contributions instead of CPP contributions. The contribution rates for QPP are higher than those for CPP.
For more information on deducting and remitting the QPP, see Guide TP-1015.G-V, Guide for Employers: Source Deductions and Contributions.
You may have a place of business in Quebec and in another province or territory. If you transfer an employee from Quebec to another province or territory, you can take into account the QPP contributions you deducted from that employee throughout the year when calculating the maximum CPP contributions to deduct. In addition to deducting QPP/CPP contributions and EI/QPIP premiums you will also have to prepare two T4 slips. It is important that you calculate and report the proper deductions and insurable/pensionable earnings on both T4 slips. For more information, see Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary.
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