Changes to the way employers deduct Canada Pension Plan (CPP) contributions are coming into effect in the new year.
Starting Jan. 1, 2012, employers must deduct CPP contributions for all employees aged 60 to 65—even if the employee is receiving a CPP or Quebec Pension Plan retirement pension and did not contribute previously.
Employers must also deduct CPP contributions for all employees who are 65 to 70 years of age unless the employee elects not to contribute to the CPP by giving you a signed and completed copy of Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election. He or she must also send the original to the Canada Revenue Agency (CRA).
Employees cannot contribute to the CPP after the month in which they turn 70 years of age.
The CRA can assess you for failing to deduct CPP contributions or for failing to remit CPP contributions to the CRA as required. The assessment may include penalty and interest charges. For more information, go to cra.gc.ca/payroll and select “Penalties, interest, and other consequences.”
Employees working in Quebec and other workers not subject to the CPP will not be affected by these changes.
For more information about what the changes mean for employers, visit cra.gc.ca/cppchanges-employers.