Who has to pay CPP or QPP contributions?

Employers in all provinces except Québec are responsible for deducting CPP contributions from employees who are 18 to 69 years old, unless the employee is collecting a CPP retirement or disability pension.  The employer pays the same premium as the employee.  Self-employed people must pay both the employee and employer portions of CPP premiums.  The amount payable is calculated on the self-employed person's personal income tax return.  See our article regarding the changes that have been proposed for rules on when CPP contributions must be deducted. The rules for employers in Québec, who must deduct Québec Pension Plan (QPP) contributions instead of CPP contributions, are generally the same, except that QPP contributions must be withheld from employees even if the employee is 70 or over, or receives a retirement pension under the CPP or the QPP. There are some types of employment and other payments from which CPP or QPP contributions do not have to be deducted.  Canada Revenue Agency (CRA) information on employment income not subject to CPP: Employment not subject to CPP Benefits & payments NOT subject to CPP CRA also has a section titled CPP/EI Explained, which talks about different types of earnings and how they are treated for CPP and EI purposes.  It includes information on tips and gratuities status of workers placed by employment agencies real estate agents Heavy machinery operators workers engaged in construction workers engaged in fishing Revenu Québec information re employment not subject to QPP: TP-1015.G-V - Guide for Employers:  Source Deductions and Contributions, section 6.4. When a person has both employment and self-employment earnings, the total CPP or QPP contribution paid will be based on total employment plus self-employment earnings.  See the following example of the calculation, for 2008, as it would be calculated on Schedule 8 of the personal tax return. Pensionable net self-employment earnings $20,000 Employment earnings not shown on a T4 slip on which you elect to pay additional CPP contributions Subtotal (zero if negative) $20,000 Pensionable employment earnings from T4 35,000 Total pensionable earnings $55,000 Less basic exemption -3,500 Earnings subject to contribution (maximum $44,900 - 3,500 = $41,400) $41,400 CPP contributions @9.9% 4,098.60 Less contributions paid through employment (from T4) $1,559.25 x2 = -3,118.50 Contributions payable on self-employment and other earnings (zero if negative) $980.10

The taxpayer would have to remit $980.10 of CPP contributions along with taxes payable.  In calculating taxes payable, a non-refundable tax credit would be allowed based on CPP of $1,559.25 paid on employment earnings, plus 50% of the $908.10 CPP on self-employment earnings, or $454.05 The other 50% of CPP on self-employment earnings, or $454.05, is allowed as a deduction from income.  This deduction is the employer portion of the CPP contribution. When an employee files a tax return, a non-refundable tax credit is calculated based on CPP contributions paid.  See also our article on getting back overpayments of CPP/QPP or EI premiums. From taxtips.ca