Maximum pensionable earnings for 2016 announced by CRA

On November 2, the Canada Revenue Agency (CRA) announced the maximum pensionable earnings under the Canadian Pension Plan (CPP) for 2016 will be $54,900. That is up from $53,600 in 2015.

According to a press release from the CRA, the new ceiling was calculated “according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.”

Therefore, those who contribute who earn more than $54,900 in 2016 are now not required or permitted to make any additional contributions to the CPP. That being said, the basic exemption amount for 2016 will remain at $3,500.

The CRA also states “the employee and employer contribution rates for 2016 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.”

The maximum employer and employee contribution to the plan for 2016 will be $2,544.30. The maximum self-employed contribution will be $5,088.60.

According to the CRA, the maximums in 2015 were $2,479.95 and $4,959.90.

CRA Fast Facts:

• The CPP applies in every province and territory in Canada with the exception of Quebec, where the Quebec Pension Plan (QPP) provides similar pensions and benefits.
• Every employed Canadian over the age of 18 must contribute to the CPP (QPP for those employed in Quebec) to qualify for a retirement pension.
• Contributions to the CPP end when a contributor turns 70.
• The CPP provides retirement, disability and survivor benefits and pensions to contributors and their families.