Canada Revenue Agency announces Maximum pensionable earnings for 2016
The Canada Revenue Agency announced today that the Maximum pensionable earnings under the Canada Pension Plan (CPP) for 2016 will be $54,900—up from $53,600 in 2015. The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.
Contributors who earn more than $54,900 in 2016 are not required or permitted to make additional contributions to the CPP.
The basic exemption amount for 2016 remains $3,500.
The employee and employer contribution rates for 2016 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.
The maximum employer and employee contribution to the plan for 2016 will be $2,544.30 each and the maximum self-employed contribution will be $5,088.60. The maximums in 2015 were $2,479.95 and $4,959.90.
- The CPP applies in every province and territory in Canada with the exception of Quebec, where the Quebec Pension Plan (QPP) provides similar pensions and benefits.
- Every employed Canadian over the age of 18 must contribute to the CPP (QPP for those employed in Quebec) to qualify for a retirement pension.
- Contributions to the CPP end when a contributor turns 70.
- The CPP provides retirement, disability and survivor benefits and pensions to contributors and their families.