Unit 6 CPP

Question 1

When was CPP first introduced

Answer 1

Jan 1, 1966

Question 2

What are two important facts about CPP

Answer 2

1. takes priority over all other statutory deductions

2. must be the 1St one deducted

Question 3

What is the age range for deducting CPP

Answer 3

age 18 to 70 years (unless disabled according to CPP)

Question 4

When an employee turns 18 what do you do

Answer 4

you have to prorate

- start deducting the first pay following the month they turn 18

Question 5

how do you prorate CPP

Answer 5

• based on # of months they will be 18 in that year

Question 6

What is important about age 65 - 70

Answer 6

Can elect to stop CPP

• CPT30 form
• copy to employer, original to CRA
• will stop the first pay of the month following the date employer received the form
• can renstate too if they change their minds

Question 7

What is important about age 70

Answer 7

• CPP stops with 1St pay of month following their 70th birthday

Question 8

What is a short list of payments and benefits that do not Qualify as pensionable for CPP

Answer 8

1. Pension payments
2. Retiring allowances or severance payments
3. Payments made after death of employee
4. some WSIB??

Question 9

What is the annual basic CPP exemption?

Answer 9

3,500

Question 10

What is the maximum pensionable earnings

Answer 10

52,500

Question 11

What is the monthly basic cpp exemption

Answer 11

291.66

Question 12

what is the semi-monthly (24) basic exemption

Answer 12

145.83

Question 13

what is the bi-weekly(26) basic CPP exemption

Answer 13

134.61

Question 14

What is the bi-weekly(27) basic CPP exemption

Answer 14

129.62

Question 15

What is the weekly (52) basic CPP exemption

Answer 15

67.30

Question 16

What is the weekly (53) basic CPP exemption

Answer 16

66.03

Question 17

What is the annual Maximum contributions earnings

Answer 17

52,500 - 3,500 = 49,000

Question 18

What is the CPP contribution rate

Answer 18

4.95% (employer and employee)

Question 19

What is the maximum deduction

Answer 19

$2,425.50

Question 20

Ex1: Tim earns $1,000 paid weekly what is his CPP contribution per week

Answer 20

1,000 - (3,500 / 52)
1,000 - 67.30 = 932.70
x 4.95%
= 46.17

Question 21

Ex2: Sara earns a salary of $1,236.00 paid bi-weekly.

She also has a monthly pensionable benefit of $75. what is her cpp contribution for each pay

Answer 21

75 x 12 = 900
              / 26
          =34.62 
      \+ 1236.00
     = 1270.62  pensionable earnings

less bi-weekly exemption
          -134.61
=       1136.01
       x 4.95%
          56.24

Question 22

E3: Regular wage pay plus bonus
Joan earns monthly salary of $3,700
Has a monthly taxable benefit of $300.00
a yearly bonus of $2,000 (on separate cheq)

Answer 22

Regular pay         $3700
Taxable benefit       300
Gross income        4,000
Less montly exemption 291.66
contributory earnings 3,708.34
                                        x4.95%
total CPP deduction      183.56

Cheq 2: Bonus
no exemption, was already applied on Chq 1

2,000 x 4.95% = $99.00

total CPP contributions: 282.56

the same would result if it was combined on both cheques

Question 23

Reaching CPP Maximum
John earns a salary of $1,236.00 paid bi-weekly
bi-weekly pensionable benefit of $55.00
already contributed 2,398.00 in cpp this year

Answer 23

salary 1236.00
pensionable benefit 55
gross income 1,291.00
less exemption - 134.61
contributiory earnings 1156.39
x 4.95%
57.25

maximum contribution 2425.50
- 2398.
= 27.50
deduct 27.50 an no more for rest of year

Question 24

E5 Employee turns 18 or 70 or dies

mike turns 18 on march 7, 2014

Answer 24

2,425.50 / 12 = 202.12
April - dec = 9 months

202.12 x 9 = 1819.12
this is his max contributions for 2014

tables: are helpful on cra website

Question 25

Name 8 pensionable earnings

Answer 25

1. all salary , wages, bonus, and other earnings received from the company 2. value of taxable benefits received 3. executive fees received 4. certain tips and gratuities 5. earnings received while on leave 6. wage-loss benefits 7. stock option benefits 8. income form any workers compensation claim

Question 26

earnings that do not qualify as pensionable (8)

Answer 26

1. earnings from an agriculture, fishing, hunting, logging if employee less than $250 2. casual labour but only if you know for an absolute fact that hey will earn less than $3,500 for the year 3. Teachers on exchange from a foreign country 4. employment of a spouse if you do not deduct the amount as an expense form your income 5. employment of a member of a religious order 6. Employment of a child where no cash remuneration was paid 7. Employment for a disaster or rescue operation 8. Employment by a government body as a census take or election worker

Question 27

Other payments and benefits that do not qualify as pensionable for cpp contributions

Answer 27

1. pension payments 2. retiring allownaces or severance payments 3. wage-loss benefits paid from an insurance co. 4. payments made after the death of employee 5. ad advance or loan by the co. to cover a workers compensation claim - the amount must be repaid or cpp must be deducted 6. an amount equal to a workers compensation award form a self-insured employer 7. benefits for clergy members Paul run with dolly Lama and clean