The Canada Revenue Agency has announced that maximum pensionable earnings under the Canada Pension Plan is increasing to $61,600 from $58,700 in 2020.
The limit is calculated using a CPP legislated formula that factors in growth in average weekly wages and salaries across Canada.
Individuals that earn more than $61,600 in 2021 will not be required or permitted to make additional CPP contributions. The basic exemption amount for 2021 is remaining at $3,500.
The employee and employer contribution rates for 2021 are increasing to 5.45 per cent from 5.25 per cent in 2020. The self-employed contribution rate is also rising from 10.5 per cent in 2020 to 10.9 per cent in 2021. The increase in contribution rate is a result of the ongoing implementation of the CPP enhancement which began in 2019.
The maximum employer and employee contribution to the plan for 2021 will be $3,166.45 each (previously $2,898) and the maximum self-employed contribution will be $6,332.90 (previously $5,796).
Your CapriCMW Benefits team is here to help with short and long-term strategies around the structure of your employee benefits and retirement programs.