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2010 CPP Rates and Maximum Deductions

2009 CPP Rates and Maximum Deductions

2010 CPP/QPP Rates, Contributions and Deductions

The CPP and QPP rate, effective January 1, 2010, remain unchanged at 4.95% of pensionable earnings. The maximum CPP/QPP contribution is $2,163.15 for the 2010 taxation year.
The basic exemption amount for 2010 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The self-employed CPP contribution rate will remain unchanged at 9.9%. The maximum employer and employee CPP contribution to the plan for 2010 will be $2,163.15, and the maximum self-employed contribution will be $4,326.30. The CPP maximums in 2009 were $2,118.60 and $4,237.20.

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2009 CPP/QPP Rates, Contributions and Deductions

At the beginning of each year, the lowest rate of the two possible rates of contribution to the public service pension plan is used until the maximum level of contribution for that rate is reached. Then, the higher rate of contribution is used for the remainder of the year. Beginning with the new year, public service pension plan contributions recommence at the low rate, until such time as they reach the maximum level of the contributions for the low rate. Therefore, if you are a contributor under the public service pension plan and you compare your last pay in December to your first pay in January, you may see that you have paid a larger amount to the plan in December than in January.

Many employees reach their maximum level of Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) contributions sometime during the year. If you reach the maximum level of CPP/QPP, you will see an increase in the amount of your net pay as there will no longer be CPP/QPP deductions withheld. Beginning with the new year, you will recommence paying CPP/QPP contributions until such time as you reach the maximum CPP/QPP contribution level for 2009.

The CPP and QPP rate, effective January 1, 2009, remain unchanged at 4.95% of pensionable earnings. The maximum CPP/QPP contribution is $2,118.60 for the 2009 taxation year.

For the calendar year 2009, the contribution rate will increase by 0.3%. Effective January 1, 2009, public service pension plan contributions will be 5.2% (to a maximum of $2,407.60 for the 2009 taxation year) on all pensionable earnings below and equal to the yearly maximum pensionable earnings (YMPE) ($46,300 for the 2009 taxation year) and 8.4% on all pensionable earnings over the YMPE.

Contributions to the public service pension plan have a direct bearing on the income tax deducted at source since these contributions are deducted from the gross pay before determining the tax rate. Once the contributions reach the maximum public service pension plan low level, the contributions will increase from 5.2% to 8.4%. The larger the public service pension plan contribution, the less income tax will be withheld from your pay.

The CPP contributions provide a federal tax credit of 15%. This tax credit is applied directly to the income tax that is owing and is not dependent on your income tax bracket. Please note that the Quebec Tax Reform eliminated the Quebec provincial tax credit for QPP effective January 1, 1998. The tax credit for QPP is now included in the basic credit amount of $10,455 for the 2009 taxation year.

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