Guide to Global Payroll Management - 2020 - 11-28

Guide to Global Payroll Management
Where an employee dies, the maximum annual contribution is prorated over the number of
months before and including the month of death. Any refund owing to the deceased employee
resulting from this proration is payable to the estate of the employee.
Employees who join a company part way through a year may have already paid the maximum
CPP contribution for the year. Even so, the new employer must begin withholding CPP
contributions all over again. When the individual files their personal income tax return by the end
of April of the following year, they will get a refund of any overpayment. The new employer,
however, is not entitled to any refund based on the employee's overpayment.
The CRA publishes Payroll Deductions Tables that can be used to determine the applicable
CPP contributions. The tables are used by referring to the appropriate pay period table (e.g.
weekly, bi-weekly, etc.) finding the 'Pay/Remuneration' column which contains the employee's
pensionable earnings range for the pay period and allocating the corresponding CPP
contribution required. The tables can be accessed at the following Web address:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/t4032-payrolldeductions-tables.html.
The deduction amounts provided in the tables already have the year's basic CPP exemption
built into them. For this reason, if paying more than one cheque within the same pay period, be
sure to use the tables for calculating the CPP contribution for one cheque only. Calculate the
CPP contribution for the second cheque by multiplying the taxable income on that cheque by
the CPP contribution rate (5.25% in 2020). This will ensure that only one pay period exemption
is applied for each pay period and that the year's basic exemption will not be exceeded.

ENHANCEMENT TO THE CPP PROGRAM
On June 20, 2016, Canada's Finance Ministers met with federal government officials to discuss
future enhancements to the CPP program. This meeting ended with a tentative deal, and the
federal government set July 15, 2016, as the deadline for provinces to accept or reject the
provisional CPP enhancement. Agreement by a minimum of seven provinces, representing at
least two-thirds of the country's population and the Federal government is required in order to
administer a change to the CPP program.
This agreement was realized by the July 15, 2016 deadline and the legislation for the enhanced
CPP was created and came into effect in 2019.
CHANGES TO CPP PENSIONABLE EARNINGS AND CONTRIBUTIONS
The changes to CPP will be gradually implemented over a seven year period from 2019 through
2025. These changes will be implemented in two phases:
Phase 1:
 Increased employee and employer contributions as follows:
o

11-28

The contribution rate will rise from 4.95% to 5.95% over a five year period
(2019 - 2023) on the Yearly Maximum Pensionable Earnings (YMPE)

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/t4032-payroll

Guide to Global Payroll Management - 2020

Table of Contents for the Digital Edition of Guide to Global Payroll Management - 2020