Budgeting and Cash Flow

Budgeting and Cash Flow


Note that for employees, CPP contributions must be deducted every pay period or on every pay stub. This means that there are deductions made by your company’s payroll department every time you get paid. When you reach the maximum annual pensionable earnings, the deductions would stop from that pay period to the end of the calendar year. If you make more than the maximum pensionable earnings, this results in your net pay cheque being higher near the end of the year, depending on how much salary you make versus the CPP contribution maximum.

For self-employed individuals, their CPP contributions will be calculated along with their income taxes, and they may have to put money aside to pay taxes and CPP (and possibly EI) contributions at the end of the year. Many self-employed people may make quarterly installment payments to the government, but either way they must plan ahead and set money aside to pay these amounts rather than having them withheld by their employer.

Multiple Jobs

If you have multiple jobs and multiple pay stubs, this deduction will occur for each one unless you are younger than 18 years old, older than 65 years old where CPP contributions are optional until age 70, or your income is projected to be below $3500 per year. If you are working past age 70, CPP contributions will not be deducted. If you have multiple jobs, CPP contributions are taken from each employer, which means you are likely overpaying. When your tax return is filed, the CPP contributions from all employers will be taken into account, and you will be refunded any overpayment through your tax return.

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