Canada Revenue Agency (CRA) announced an increase in maximum pensionable earnings for CPP from $55,900 in 2018 to $57,400 for 2019, a 2.7% increase. The increase was made to reflect the growth in average Canadian weekly wages and salaries. This means the maximum employee/employer contribution will rise to 5.1% from $2,593.80 in 2018 to $2,748.90 in 2019. The maximum self-employed contribution will be 10.2% or $5,497.80. The basic exemption amount remains at $3,500 annually.
Example (source CRA)
Joseph receives a weekly salary of $500 and $50 in taxable benefits. Calculate the amount of CPP contributions that you have to pay.
Step 1: Calculate the basic pay-period exemption
$3,500 ÷ 52 = $67.30 (do not round off)
Step 2: Calculate the total pensionable income
$500 + $50 = $550
Step 3: Deduct the basic pay-period exemption from the total pensionable income
$550 – $67.30 = $482.70
Step 4: Calculate the amount of CPP contributions
$482.70 × 5.1% = $24.62
Step 5: Calculate the amount of CPP contributions you (the employer) have to pay
$24.62 × 2 = $49.24
