Canada Pension Plan (CPP) Updates for 2024: What You Need to Know
If you've noticed a little less money in your paycheck lately, you’re not alone! The Canada Pension Plan (CPP) changes in 2024 are here, and they’re impacting employees and self-employed individuals alike. Let’s break it down so you can understand how this affects your income—and what you can do about it.
What’s Changing in CPP for 2024?
The basic annual exemption remains at $3,500, but here’s the catch:
For earnings up to $65,000, the CPP contribution rate is 5.95%, which means you’ll pay a maximum of $3,867.50 in contributions this year. This is known as the Yearly Maximum Pensionable Earnings (YMPE).
But that’s not all!
The second tier of CPP contributions (CPP2) kicks in for earnings between $68,500 and $73,200. You’ll pay an additional 4% on that income, which works out to an extra $188.80.
If you’re self-employed, you’ll feel this even more, as you’re responsible for both the employer and employee shares—doubling that amount to $376.00.
You’ll find details about your CPP2 contributions on your T4 slip in Box 16A.
CPP and Indigenous Workers: What You Should Know
At Ask-Her Tax + Bookkeeping Inc., we proudly serve small business owners and Indigenous clients across Alberta, including Olds and surrounding areas. We understand that navigating the Canada Pension Plan (CPP) can be especially confusing for First Nations Peoples due to unique rules under the Indian Act. Let’s clarify how CPP applies to you.
Are Indigenous Workers Exempt from CPP?
By default, income earned on a reserve is not considered pensionable employment under the CPP. However, you can choose to participate if you meet certain criteria. Here’s how it works:
If You’re an Employee:
Your employer can opt into the CPP on your behalf by completing Form CPT124 (Application for Coverage of Employment of an Indian in Canada under the CPP).
If your employer doesn’t make this election, you can still opt in yourself! You’ll need to pay both the employer and employee portions within one year of April 30th of the tax year.
If You’re Self-Employed:
You can also choose to contribute to the CPP, even if your income is earned on a reserve. Just like employees, you’ll need to pay both the employer and employee portions of the contribution.
Why Opt Into the CPP?
Contributing to the CPP can help you build retirement savings and provide additional benefits, such as disability and survivor benefits. While it’s optional for Indigenous workers under certain circumstances, participating could help secure your financial future.
Let’s Make Tax Season Easier
We know taxes and bookkeeping can feel overwhelming, especially when you’re juggling CPP rules and other financial obligations. That’s why Ask-Her Tax + Bookkeeping Inc. is here to help. Whether you’re a small business owner, a self-employed professional, or managing your personal taxes, we’ll ensure you understand your obligations and maximize your returns.
Feel free to reach out with any questions about CPP, Indigenous tax rules, or anything else tax-related. We’re here to simplify your financial journey and support your success.
Happy Taxing!If you have any questions at all regarding the information in this post please reach out to us at Ask-Her! Serving Olds, Alberta, and beyond.
We wish you the best and Happy Taxing.
Shelilia Vivier - President/CEO
Ask-Her™ Tax + Bookkeeping Inc.
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