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What Canadians need to know about the CRA's revised CPP contributions for 2024

In a significant development for Canadians planning their financial futures, the Canada Revenue Agency (CRA) has revealed key changes to the Canada Pension Plan (CPP) for the upcoming year 2024.
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In a significant development for Canadians planning their financial futures, the Canada Revenue Agency (CRA) has revealed key changes to the Canada Pension Plan (CPP) for the upcoming year 2024. These changes include adjustments to the maximum pensionable earnings and contributions, as well as the introduction of a new earnings ceiling.

Here's what you need to know:

Maximum Pensionable Earnings Increase

Starting from January 1, 2024, the maximum pensionable earnings under the CPP will see an increase to $68,500, up from $66,600 in 2023. This change offers an opportunity for Canadians to contribute towards a more secure retirement.

Basic Exemption Amount Unchanged

While the maximum pensionable earnings increase, the basic exemption amount for 2024 remains the same at $3,500. This means that only earnings above this threshold will be considered for CPP contributions.

Introduction of a Second Earnings Ceiling

A significant alteration comes in the form of a new earnings ceiling. Starting in 2024, a higher, second earnings ceiling of $73,200 will be introduced. This second earnings ceiling will be used to calculate additional CPP contributions, referred to as CPP2. Any pensionable earnings between $68,500 and $73,200 will be subject to CPP2 contributions.

These new ceilings have been calculated in accordance with the CPP legislation, taking into account the growth in average weekly wages and salaries in Canada.

CPP Contribution Rates and Amounts

The contribution rates for employees and employers for the year 2024 will remain steady at 5.95%. This means that the maximum contribution for both employees and employers will increase to $3,867.50, up from $3,754.45 in 2023.

Self-employed individuals will also experience an adjustment in their contribution rates. The self-employed CPP contribution rate for 2024 will remain at 11.90%, with the maximum self-employed contribution increasing to $7,735.00, up from $7,508.90 in 2023.

Introduction of CPP2 Contributions

For the first time in 2024, the CPP2 contribution system will come into play. Both employee and employer CPP2 contribution rates for 2024 will be 4.00%, with a maximum contribution of $188.00 each. The self-employed CPP2 contribution rate will be 8.00%, and the maximum self-employed contribution for CPP2 will be $376.00.

It's important to note that contributors are neither required nor permitted to make contributions on pensionable earnings exceeding the new $73,200 ceiling.

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