Question

In May of the current year, your employer received a PIER report from the CRA that identified Canada Pension Plan (CPP) contribution deficiencies for employees in the organization who:

turned 18 during the year

turned 70 during the year

had chosen to opt out of paying CPP by submitting a completed CPT30 form

To avoid a recurrence, the Payroll Manager, Melissa Chan, has asked you to prepare a summary of the CPP reporting requirements on T4 information slips. The summary will be used to validate the current payroll setup to ensure that the T4s will be completed properly in future. Provide information on the CPP related boxes that must be completed, including how any amounts are calculated, for employees who:

are under 18 for the entire year

turn 18 during the year

are over 70 for the entire year

turn 70 during the year

submit a completed CPT30 form during the year, electing to stop contributing to the Canada Pension Plan

submit a completed CPT30 form during the year, revoking their previous election to stop contributing to the Canada Pension Plan

Answer 1

From the given information, we know that

CPP Reporting Requirements on T4 Information Slips:

• Use only "X" in the appropriate section of box 28, if the employee was exempt from C/QPP contributions or EI premiums for the entire year. If the status is selected as "exempt" for C/QPP contributions or EI premiums, the appearing value should be "zero" in CPP Pensionable Earnings (box 26) and/or EI Insurable Earnings (box 24) with no amount in CPP contributions (box 16) and/or EI premiums (box 18)
• If the employee attains the age of 18 years during the year, the C/QPP contributions and the pensionable earnings shall be calculated starting on the first pay of the month following the 18th birthday.
• Similarly, if the employee attains the age of 70 years during the year, the CPP contributions shall be stopped from the first pay of the month following the 70th birthday.
• If the employee was considered disabled by the Canada Pension Plan or the Regie des rentes du Quebec, the deductions shall be stopped from the first pay of the month following the month on which the employee was considered disabled.
• If the employee began collecting a CPP retirement pension, was over the age of 65 and file a CPT30 - Election to stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election Form, the contributions should cease from the first pay of the month following the month the employer received the completed form.
• The QPP contributions shall not stop, if the employee attains the age of 70 years or when he/she receives a retirement pension; but shall be stopped when the employee is considered to be disabled by the Canada Pension Plan or the Regie des rentes du Quebec.

Information about CPP related boxes, which must be duly filled:

The following boxes must be duly filled:

• CPP Contributions reported in box 16
• Pensionable Earnings reported in box 26
• Exemption of employee from CPP Contributions in box 28

How the amounts shall to be calculated:

The employee CPP Contributions reported in box 16 must be equal to the pensionable earnings reported in box 26 less the annual exemption multiplied by the current contribution rate to the annual maximum contribution.

The formula for deriving the same is as follows:

{(CPP pensionable earnings shown on T4 Slip – CPP basic exemption for the year) x

Applicable CPP contribution rate for the year}