Law Business Essentials

You have to deduct CPP contributions from an employee's remuneration if that employee is

• 18 years or older, but younger than 70;
• is in pensionable employment during the year;
• is not considered to be disabled under CPP; and
• does not receive a CPP retirement or disability pension.

You also must contribute the same amount of CPP that is deducted from your employee.
For example:

You generally deduct CPP contributions from the following amounts:

• salary, wages, commissions, including advances and wages in lieu of termination;
  
• any share of profits or other incentive payments; and
  
• remuneration received while retired, on vacation, sabbatical, sick leave, or any supplementary unemployment benefit plans (e.g., parental leave top-up).

Each year the government sets a maximum pensionable earning amount and a rate to calculate the CPP deduction. For example, in 2025, you stop deducting CPP contributions when you reach the employee's pensionable earning amount, which is $71,300 or the maximum employee contribution for the year, which is $4,034.10. You can also use the payroll deduction tables to calculate the CPP deduction.

In 2024, the CPP introduced an enhancement referred to as CPP2, specifically for higher earners. Beginning in 2025, employees who earn above the first earnings ceiling of $71,300 will contribute an additional 4 per cent of their income that exceeds this threshold, up to $81,200, and their employer will contribute an additional 4 per cent up to the same amount. The CPP2 enhancement provides higher earners an opportunity to increase their maximum CPP retirement pension.