Changes to the CPP for 2012

Changes to the Canada Pension Plan in 2012 came as a nasty surprise for some Canadians. The previous rule was that once you began receiving your CPP retirement pension, you were not longer required to contribute to the CPP. Now, that’s a different story. Starting January 1, 2012 all employees (and self-employed taxpayers) will be required to contribute to CPP even if they are already collecting a CPP retirement pension. For employees over age 65, there’s a way to opt out – you have to fill in Form CPT30. If you don’t file that Form with your employer you’ll be paying CPP contributions on your earnings as on January 1. For employees ages 65 to 69, beginning January 1, 2012, payroll departments are required to withhold CPP contributions unless they have a completed Form CPT30 “Election to stop contributing to the Canada Pension Plan, or revocation of a prior election” on file. The election will apply to the first month following the receipt of the completed form by the employer. So, if you don’t want to pay CPP, let’s say, in February, you must file the form by January 31, 2012.

Employees who are under age 65 will have to start contributing to CPP again on January 1, even if they are already collecting a retirement pension. Surprise, surprise…Employees who are over 70 continue to be exempt. For self-employed taxpayers, the requirement is not so urgent. For self-employed taxpayers between age 65 and 69 to opt out of the additional CPP contributions, all that is required is to indicate on Schedule 8 for 2012 (filed with their 2012 tax return) which month they want to cease contributing.

You can always CONTACT US to discuss your particular situation.