Calculation of Canada Pension Plan (CPP) contributions (multiple pay periods or year-end verification)

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Calculation of Canada Pension Plan (CPP) contributions (multiple pay periods or year-end verification)

Use this calculation to determine an employee’s CPP contributions over multiple pay periods, or to verify an employee’s CPP contributions at year-end before you fill out and file the T4 slips. You can get the information you need to fill out this calculation from each employee’s payroll master file.

Using the calculation will help you avoid the possibility of receiving a Pensionable and insurable earnings review (PIER) report.


Note


Before using this calculation to determine an employee's CPP contributions over multiple pay periods, see Starting and stopping CPP deductions.

Calculation of CPP contributions

To calculate or verify deductions, follow these steps:

Calculation of Canada Pension Plan contributions
Step 1 – Enter the salary, wages, benefits, and allowances for the total period of employment from the employee’s payroll master file that you will include in box 14, Employment income of the T4 slip ............................................................... $ ______ 1
Step 2 – Subtract from line 1 the following earnings of the employee:
  • the amount the employee received before and including the month the employee turned 18 .................................
 $ _______
  • the amount the employee received after the month the employee turned 70 ..........................................................
 $ _______
  • the amount the employee received after the effective date of the employee’s completed and signed election Form (CPT30) to stop contributing to the CPP ........................................................................................................
 $ _______
  • the amount the employee received before and including the month in which the employee provided you with a completed and signed revocation Form (CPT30) to start contributing to the CPP ..................................................
 $ _______
  • the amount the employee received during the months the employee was considered to be disabled under the CPP or QPP .............................................................................................................................................................
 $ _______
  • any income from Employment, benefits, and payments from which you do not deduct CPP contributions, described in Chapter 2 of this guide ........................................................................................................................
 $ _______

Total earnings that do not require CPP contributions ..............................................................................................

 $ _______ 2
Step 3 – Pensionable earnings for the period of employment (to a maximum of $64,900 for 2022) Line 1 minus line 2 ........... $ _______ 3
Step 4 – Enter the basic exemption for the pay period................................................................................................................. $ _______
Multiply by the number of pay periods of pensionable earnings (related to the amount on line 3). Make sure not to include pay periods that apply to the earnings listed in Step 2 above .............................................................................. x _______
Basic exemption that applies to the period of pensionable employment (for more information, see Chapter 2). This amount cannot be more than the maximum yearly basic exemption of $3,500 ................................................................ $ _______ 4
Step 5 – CPP contributory earnings for the period of pensionable employment – Line 3 minus line 4 ........................................ $ _______ 5
Step 6 – Enter the CPP contribution rate for the year (5.70% for 2022) ...................................................................................... $ _______ 6
Step 7 – Employee’s required CPP contributions for the period of pensionable employment (maximum $3,499.80 for 2022) – Line 5 multiplied by the rate on line 6 ............................................................................................................................... $ _______
Step 8 – Enter the CPP contributions from the employee’s payroll master file that you deducted for the period of pensionable employment ....................................................................................................................................................................... $ _______ 8
Step 9 – Line 7 minus line 8. The result should be zero ............................................................................................................... $ _______ 9

If the amount on line 9 is positive, you have under deducted contributions. If this is the case, add line 8 and line 9 and include the total in Box 16 – Employee's CPP contributions of the T4 slip.


Note


If the amount on line 9 is negative, you may have over deducted contributions. If this is the case, check the employee’s master file to make sure that the amounts on line 1 and line 3 are correct. For more information, see Make corrections before filing.


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Date modified:
2023-09-27