The Canada Revenue Agency announced on Friday that the maximum pensionable earnings under the Canada Pension Plan for 2020 will be $58,700, up from $57,400 in 2019.
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, the CRA said in a release.
Contributors who earn more than $58,700 in 2020 aren’t required or permitted to make additional contributions to the CPP. The basic exemption amount for 2019 remains at $3,500.
Employee and employer CPP contribution rates for 2020 will be 5.25%, up from 5.1% in 2019.
The self-employed contribution rate will be 10.5%, up from 10.2% in 2019. This increase is due to the CPP enhancement that was implemented on Jan. 1, 2019.
The maximum employer and employee contribution to the CPP for next year will be $2,898 each, and the maximum self-employed contribution will be $5,796. The maximums in 2019 were $2,748.90 and $5,497.80, respectively.
Source: Investment Executive