CPP Changes in Effect January 1, 2012


On January 1, 2012, previously announced changes to Canada Pension Plan (CPP) came into force. Prior to this year, employers had to stop deducting CPP contributions from an employee’s pensionable earnings when the employee was 60 to 70 years of age if the employee was already collecting CPP payments. Now an employer must deduct CPP contributions for pensionable earnings for individuals in that category. To see a copy of the January 27, 2012, news release, go to Canada Revenue Agency’s web site at http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/cpp-rpc/cppchng-eng.html.

Also, on December 15, 2011, the Federal government passed Bill C-13, which amends the Canada Pension Plan (CPP) Act to require employers to calculate and remit CPP on employer-paid short term and long term disability (STD & LTD) payments. The amendments are retroactive to January 1, 2006, and are intended to protect the right of employees to receive these benefits, and to later claim CPP entitlements on those amounts.

If employers have not previously withheld CPP on employer paid STD and LTD payments, they should start doing so effective January 1, 2012. For those employers concerned about the effect of the January 1, 2006, retroactive changes, Canada Revenue Agency is reported to have said that they will only review requests made by individuals on a case by case basis.