In this first of a three part series – knowing these changes will help keep you from smarting.
CPT30 - In last week’s article, I discussed where common errors occur that result in Canada Revenue Agency issuing a PIER (Pensionable and Insurable Earnings Review) report. One change, effective January 1, 2012 that caused a lot of PIER reports and will likely result in more reports this year is the change in employee Canada Pension or Quebec Pension Plan contribution rules when an employee is between the ages of 60 and 70.
Employees between the ages of 60 and 65 who had previously opted to receive their Canada or Quebec Pension Plans payments had to start contributing to these plans again.
For those between 65 and 70, who were in receipt of CPP or QPP payments, there was an option to opt out of further contributions, but in order to do so, they had to complete a form CPT30, and provide that form to their employer.
So, if an employer receives a PIER report and the cause is related to the exemption claimed under the CPT30, the employer simply returns the report along with a copy of the CPT30, and no further action is required.
I think Revenue Canada realized after the fact that requiring employees to opt out, in writing, was an administrative error, and in practice, they have been allowing employees to file retroactively and have been accepting back dated CPT30s.
CPP for 2014. Canada Revenue Agency has announced the 2014 rates. The maximum pensionable earnings will increase to $52,500 up from $51,100. Those earning in excess of $52,500 are not required or permitted to make any additional contributions. The basic exemption remains the same and the employer and employee contributions also remain the same. The maximum contribution rate for both the employer and the employee will increase to $2,425.50.
- Bill Smyth CPA, FCGA, FCPA
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