Canada Revenue Agency (CRA) has recently introduced some changes to the CPP contribution rules beginning on January 1, 2012. These changes will affect you if you are an employer who has employees aged 60 to 70 years old. Depending on the age of your employees, you may need to begin deducting CPP premiums from their paycheques, beginning on January 1, 2012. Please note the potential changes to payroll deductions below: (changes have been noted in bold)
|Age of the Employee||Current Rules (paycheques up to and including December 31, 2011)||New Rules (paycheques on or after|
January 1, 2012)
|Under 18||CPP exempt||CPP exempt (No change)|
|Between 18 to 60||CPP contributions required||CPP contributions required (No change)|
|Between 60 to 65||CPP contributions required unless the employee provided proof that they are receiving CPP retirement benefits||CPP contributions required (No exceptions)|
Between 65 to 70
|CPP exempt||CPP contributions required UNLESS the employee files an election with you and CRA to stop paying CPP contributions|
|Between 65 to 70|
(currently not receiving CPP benefits)
|CPP contributions required||CPP contributions required (No change)|
|Age 70 and above||CPP exempt||CPP exempt (No Change)|
Please forward this information to your employees who are between 60 and 70 and to your payroll administrator. If you have employees who are aged 65 to 70 and they do NOT want to make CPP contributions, please ensure that you receive their election form PRIOR to January 1, 2012. The election is effective on the first day of the month following the day the employee provides you the signed election form. The election form can be accessed through CRA’s website at http://www.cra-arc.gc.ca/E/pbg/tf/cpt30/cpt30-11e.pdf. Please remind your employees that they must file this form with CRA. We recommend that your employees complete the election forms, provide you a copy, and send the originals to CRA by December 2011.
If your employee is turning 65 during 2012, please remind them of this rule change.
Failure to correctly deduct CPP contributions may result in penalties and interest charges.
If you would like assistance with this, or if you have any questions, please contact us.
For more information, please visit CRA’s website http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/cpp-rpc/cppchng-wh-eng.html