CRA announces maximum pensionable earnings for next year
Canada Revenue Agency announced Nov. 3 that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2021 will be $61,600. This is an increase from $58,700 in 2020.
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 $61,600 in 2021 are not required or permitted to make additional contributions to the CPP. The basic exemption amount for 2021 remains at $3,500.
Contribution rates for 2021
The employee and employer contribution rates for 2021 will be 5.45%, an increase from 5.25% in 2020. The self-employed contribution rate will be 10.9%, up from 10.5% in 2020.
“The increase in contribution rate is due to the continued implementation of the CPP enhancement,” explained the CRA in a statement.
The maximum employer and employee contribution to the plan for 2021 will be $3,166.45 each and the maximum self-employed contribution will be $6,332.90. The maximums in 2020 were $2,898.00 and $5,796.00.