Question

An employee, who is paid $2,130.00 on a semi-monthly basis, is also being paid a
$1,200.00 bonus on a separate cheque, within the same pay period.

To date this year, the employee has only had $1,968.00 in Canada Pension Plan
(CPP) contributions deducted, so the employee will not reach the maximum with
these payments.

Calculate the employee’s CPP contribution on the regular semi-monthly pay of
$2,130.00 and on the separate bonus payment of $1,200.00. Show all calculations for
full marks.

Answer 1

SO As we know annual maximum employee contribution is $2898.00

Canada Pension (CPP) and Employment Insurance (EI) are mandatory deductions on a bonus payment with one exception — when an employee has contributed the maximum yearly amounts for CPP and/or EI no further deductions will occur.

Calculate the basic pay-period exemption

$3,500 ÷ 24 = $145.83 (do not round off)

Pansiable income=$2130+$1200=$3,300

CPP Value=$3,300x5.25/100- $173.85

Employee CPP contribution Semi Monthly =$173.85

Yearly-$173.85x24=4,172.4

But maximum employee contribution is $2,898

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