# CPP Payments



## Zzed (Feb 16, 2011)

Hi,

Im a recently self-employed contractor, and now need to take care of my CPP payments. Previously, my employer took care of it so I dont know where its actually paid to (I assume its CRA?).
I want to make monthly CPP installments, but i'm not sure who I pay or how to set up payment system with my bank (CIBC).

I looked into my bill payment section of my online banking and I see
CRA-Installments 
CRA-Filings 
I know the CRA-Filings is what I use for my income tax payments, I think i would use the CRA-Installments for the CPP? 

Please point me in the right direction, thank you!


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## OptsyEagle (Nov 29, 2009)

If you are talking about CPP payments, just for yourself, then they get paid at the same time and place that you pay your personal income taxes. They are calculated on a schedule, I think #8, end get added to your income taxes payable. You have to pay both your share and the employers share and you get a tax credit for half and a tax deduction for the other half. All this is worked out when you do your taxes after the end of the year. If you want to get a jump on it you can calculate what you think you owe and pay it as an installment payment to CRA through your internet banking bill payment service. Just search for CRA installments and set up your SIN and make the bill payment. CRA will be more then happy to receive it.

If it is CPP for employees that work for you, then that has to be done within 6 weeks of when you pay the employee through a payroll remittance. This would also include EI and withholding taxes. Search payroll at CRA to find out how to do this.


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## balexis (Apr 4, 2009)

There is no such thing as monthly CPP installments. The CPP amount you owe will be calculated with your next tax report by a good tax preparation software or your accountant. More often than not, you will have to write a fat check to the CRA on the first year of self-employment since you will not be making installment payments (yet). Make sure to stash approx the right amount of money in a HISA until tax time next year.

In case you did not know, now that you are self-employed, you are responsible for both the worker AND the employer's share of the CPP payment. That comes out to a few 1000's, depending on your income.

Edit: X-post with Optys


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## Zzed (Feb 16, 2011)

Thanks for the replies.

I'll be employed up to May 31st with my current employer, so I know for the first 5 months of the year CPP payments have been coming out of my paycheque and half from my employer. 
So once I get my last pay stub i'll know how much have been contributed to date. 
Correct me if i'm wrong but I understand there's a maximum contribution of just over $4000 (i dont know the exact number).
Based on my income for the year ill likely reach the maximum amount. 
I understand I can contribute at the end of the tax season, but for the year i'll be paying the maximum anyway..

So if i wanted to contribute on a monthly basis would the math be:
(Maximum contribution) - (Contributed to date) / (7 months)

But if I dont have to contribute on a monthly basis the best option is likely to just throw the money into a HISA along with the HST I'll have to pay out too.


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## balexis (Apr 4, 2009)

Zzed said:


> Correct me if i'm wrong but I understand there's a maximum contribution of just over $4000 (i dont know the exact number).


Indeed, something like 4000$ is the max.

It is a good idea to look at your last pay stub to see the current state of your contributions. It will give you an idea of the remaining amount you will owe at the end of the year.


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## stardancer (Apr 26, 2009)

The max CPP contribution for an employee is $2163; so for a self-employed it would be $4326 (plus change)

If you end up owing more than $3000 at the end of the year, two years in a row, you will have to pay installments. You can set up installments in advance if you know you will owe quite a bit based on your self-employment income. The installment payments should also cover the CPP owing.


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## nice4 (Mar 20, 2011)

Interesting topic. May I ask what is the advantage of making CPP contribution while being as a independent contractor? I don't have much of knowledge of CPP contribution and as per CRA that I am having only 15 'M'aximum contribution and the rest are being (contributed but at )not as maximum. Like OP, should I make my CPP max contribution even CRA never ask me to do so ?
Thanks


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## MoneyGal (Apr 24, 2009)

You can't "overpay" into CPP - the amount you pay is based on your insurable earnings up to a yearly maximum (and then the amount you get is based on your contributions in).


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## Eclectic12 (Oct 20, 2010)

nice4 said:


> Interesting topic.
> 
> May I ask what is the advantage of making CPP contribution while being as a independent contractor?
> 
> ...


As far as I am aware, it's not that the CPP contributions are an "advantage" . The CPP payments (employee + employer) are required.

URL: http://www.taxtips.ca/personaltax/employees/employeevscontractor.htm


Cheers


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## Plugging Along (Jan 3, 2011)

nice4 said:


> Interesting topic. May I ask what is the advantage of making CPP contribution while being as a independent contractor? I don't have much of knowledge of CPP contribution and as per CRA that I am having only 15 'M'aximum contribution and the rest are being (contributed but at )not as maximum. Like OP, should I make my CPP max contribution even CRA never ask me to do so ?
> Thanks


As a contractor/self employed, it is optional to pay CPP (both the employer and employee portion)

The advantage is by paying in to the CPP as an contractor, you will also receive CPP when you hit retirement. If you don't pay into it now, then you get nothing later for CPP. It really depends on you specific situation if you think you can do better by not paying the CPP now, and investing vs. paying into it.

For us, it's just another form of income in our retirement to diversify our income streams.


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## MoneyGal (Apr 24, 2009)

Uh...every person who has employment or business income is required to pay into CPP (with very few exceptions - i.e. you are not required to pay premiums when your total yearly employment income is under $3500). 

If you structure your income so you receive dividends (for example) you can avoid paying CPP premiums but otherwise, self-employed people pay both the employee and employer portion.


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## Plugging Along (Jan 3, 2011)

What MG said... =)... I thought that CPP payments were optional if you were self employeed, but just realized we did it though dividends.


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## Spudd (Oct 11, 2011)

My husband is self-employed. Does the CPP thing happen automatically when you do your taxes? I don't remember him paying any CPP.


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## stardancer (Apr 26, 2009)

The CPP calculation on self-employed earnings is calculated on Schedule 8 when you do your tax return. If you use a program, an accountant or a bookkeeper, it would be done automatically. The amount of CPP owing is included in the total amount owing, being put on line 421, page 4, and is also included in any installments you must pay.

Unless you have to remit CPP etc for employees, the CPP amount you would owe is not separate. Obviously, if you have a business loss, you would owe no CPP.


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