Electing out of CPP payments

senior cpp image

Did you know that if you are receiving CPP benefits, are still working and are between the ages of 65 and 70, you can elect to stop making CPP contributions.

Contributing to the Canada Pension Plan (CPP) is mandatory for working Canadians between the ages of 18 and 64, but optional after age 65.

This election can be filed if the following conditions are met:

  • You are between 65 and 70 years of age
  • You receive Canada Pension Plan benefits
  • You are working and have pensionable employment earnings that require CPP contributions

 

This can be done by completing the form CPT30, providing a copy to your employer and sending the original to the Canada Revenue Agency (CRA). Once completed, the election becomes effective on the first day of the next month. This means if you turn 65 in May, and you send in the election form on your birthday, your employer can stop deducting CPP from your earnings on June 1.

You can also file this election if you are self-employed.  However, instead of filling out form CPT30, you would complete Schedule 8 CPP Contributions and Overpayment on your annual T1 tax return. Similar to employees, you must be at least 65 and the election takes effect on the first day of the next month of the stop date selected.

Deciding whether to continue to contribute to the Canada Pension Plan depends on your financial situation and many other factors. Note that for employees, CPP costs 4.95% of your earnings. Your employer takes care of their portion. If you are self-employed or own your own business, this number doubles because you need to pay both the employer and employee portion.

Filing this election is not permanent. You can choose to restart contributing to CPP as long as you are still within the required age range. However, the form can only be filled out once a year. If you filed the election this year, you need to wait until next year to start contributing again. As soon as you turn 70, you are no longer required to pay into CPP.

The form CPT30 can be found here.

To help you decide if you should make this election, please give us a call at 780.466.6204, or click here to send us an email.

Thanks to Stephanie Kwan of KWB Chartered Accountants for providing this content.

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