For 2022, the Canada Revenue Agency (CRA) has announced increased employee and employer contributions rates and the maximum pensionable earnings amount for the Canada Pension Plan (CPP) [CRA, Tax Tips, 1 November 2021].
Effective 1 January 2022, employee and employer CPP contribution rates will increase to 5.7% from 5.45%; the rate for self-employed persons will increase to 11.4% from 10.9%. Also effective 1 January 2022, the CPP maximum pensionable earnings amount will increase to $64,900 from $61,600. Contributors who earn more than $64,900 in 2022 are not required or permitted to make additional contributions to the CPP.
For 2022, the CPP maximum annual employee and employer contribution will increase to $3,499.80 each from $3,166.45 each; the maximum annual contribution for self-employed persons will increase to $6,999.60 from $6,332.90.
The increase in the contribution rates is due to the continued implementation of the CPP enhancement, explains the CRA. Also, the new threshold was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.
Laura Lough, Esq., is Director of Publications for the American Payroll Association