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July 14—Canada will not impose a mandatory increase in Canada Pension Plan (CPP) contributions but has opened consultations with the public on options for a voluntary supplement to the CPP, Minister of Finance Joe Oliver said July 13.
The options for voluntary supplements “would build on past initiatives like creating Tax-Free Savings Accounts and enhancing Guaranteed Income Supplement benefits,” Oliver said.
The federal government has been criticized by some political parties for not augmenting the CPP enough to allow workers to maintain their standard of living into retirement. The government of Ontario has begun the process of creating a provincial pension plan to make up for a lack of “enhancements” to the CPP.
Employers must withhold CPP contributions for employees aged 18 years to 70 years, who are in pensionable employment and not disabled, and remit them to the Canada Revenue Agency. Employers also must contribute an amount equal to their employees. The CPP tax rate for employees and employers is 4.95 percent and can only be withheld on a maximum of C$53,600 ($42,034) or applicable earnings, minus a C$3,500 ($2,744) annual exemption.
Comments on the consultations must be submitted to the Department of Finance by Sept. 10, 2015.
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The Canadian Department of Finance news release is available at: http://www.fin.gc.ca/n15/15-067-eng.asp.
The consultation document is available at: http://www.fin.gc.ca/activty/consult/vscpp-svrpc-eng.asp.
More information on payroll issues in Canada can be found in the Canada country primer.
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