3.6 – CPP Deductions and Contributions

Each year the government sets a maximum pensionable earning amount and a rate to calculate the CPP deduction. For example, in 2021 you stop deducting CPP contributions when you reach the employee’s pensionable earning amount, which is $61,600 or the maximum employee contribution for the year, which is $3,166.45. You can also use the payroll deduction tables to calculate the CPP deduction.

For up-to-date rates, you can check the Canada Pension Plan website.

You have to deduct CPP contributions from an employee’s remuneration if that employee is:

• 18 years or older, but younger than 70;
• is in pensionable employment during the year;
• is not considered to be disabled under CPP; and
• does not receive a CPP retirement or disability pension.

You generally deduct CPP contributions from the following amounts:

• salary, wages, commissions, including advances and wages in lieu of termination;
• any share of profits or other incentive payments; and
• remuneration received while retired, on vacation, sabbatical, sick leave, or any supplementary unemployment benefit plans (e.g., for maternity and paternity top-up).

You also must contribute the same amount of CPP that is deducted from your employee.

For example:

(Assuming the employee’s annual earnings are $61,600, there are 12 pay periods and using 2021 rates)