In May of the current year, your employer received a PIER report from the CRA th
ID: 2332202 • Letter: I
Question
In May of the current year, your employer received a PIER report from the CRA that identified Canada Pension Plan (CPP) contribution deficiencies for employees in the organization who:
turned 18 during the year
turned 70 during the year
had chosen to opt out of paying CPP by submitting a completed CPT30 form
To avoid a recurrence, the Payroll Manager, Melissa Chan, has asked you to prepare a summary of the CPP reporting requirements on T4 information slips. The summary will be used to validate the current payroll setup to ensure that the T4s will be completed properly in future. Provide information on the CPP related boxes that must be completed, including how any amounts are calculated, for employees who:
are under 18 for the entire year
turn 18 during the year
are over 70 for the entire year
turn 70 during the year
submit a completed CPT30 form during the year, electing to stop contributing to the Canada Pension Plan
submit a completed CPT30 form during the year, revoking their previous election to stop contributing to the Canada Pension Plan
Explanation / Answer
From the given information, we know that
CPP Reporting Requirements on T4 Information Slips:
Information about CPP related boxes, which must be duly filled:
The following boxes must be duly filled:
How the amounts shall to be calculated:
The employee CPP Contributions reported in box 16 must be equal to the pensionable earnings reported in box 26 less the annual exemption multiplied by the current contribution rate to the annual maximum contribution.
The formula for deriving the same is as follows:
{(CPP pensionable earnings shown on T4 Slip – CPP basic exemption for the year) x
Applicable CPP contribution rate for the year}
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