MORE CPP

Further to the comments that I made about changes for taxpayers that are 61 to 70, here is some information for everyone that will dent your 2012 pay. CRA has set the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2012 at $50,100—up from $48,300 in 2011. The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.

Contributors who earn more than $50,100 in 2012 are not required or permitted to make additional contributions to the CPP. The basic exemption amount for 2012 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP. The employee and employer contribution rates for 2012 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2012 will be $2,306.70, and the maximum self-employed contribution will be $4,613.40. The maximums in 2011 were $2,217.60 and $4,435.20.

Since the contribution rates have not changed, only those at the maximum earnings will pay the additional amounts when they reach the 2011 maximum. Self employed persons will make the additional payments with their tax returns.