2021 CPP increases far more than expected
Do you remember this viral video that Clayton made in January of 2019 where he rebuked the Federal Liberals for their marketing stunt saying that small businesses were set to save $7,500 because of the 2019 CCPC corporate tax rate reduction?
In this video Clayton counters the Liberal’s misleading claim by highlighting the fact that they also introduced (heavy) CPP rate increases between 2019 to 2025, up to $645/employee. Turns out the number is closer to $1,350/employee. With these changes in full swing, and starting a new year, the 2021 CPP rate increase is a LOT more than we were expecting.
Just how much has the CPP rate increased since 2018? $573/employee and $1,145/self-employed individual. This means that every employee earning at least $61,600 in 2021 can expect to receive $573 less than in 2018 and every small business has to pay the same amount more in payroll taxes. Self-employed individuals get hit doubly as hard.
The largest increase ($269 and $538 respectively) occurred just a few days ago, during a global pandemic, amid calls for the Federal Liberals to pause CPP rate hikes and just days after they announced an astronomical Carbon Tax increase to $170/tonne, and weeks after Canada’s Food Price Report noted that food is set to increase by an average of $700/family of 4 this year alone.
Talk about sticking it to the little guy. Helping the middle class indeed. If you own a small business and run your own payroll, make sure you update your system accordingly.
CPP Rate increases
|Max earnings||$ 55,900||$ 57,400||$ 58,700||$ 61,600|
|Basic Exemption||$ 3,500||$ 3,500||$ 3,500||$ 3,500|
|Maximum paid by||2018||2019||2020||2021|
|Employer||$ 2,594||$ 2,749||$ 2,898||$ 3,166|
|Employee||$ 2,594||$ 2,749||$ 2,898||$ 3,166|
|Self-employed||$ 5,188||$ 5,498||$ 5,796||$ 6,333|
|Increase from 2018||2018||2019||2020||2021|
|Employer||$ –||$ 155||$ 304||$ 573|
|Employee||$ –||$ 155||$ 304||$ 573|
|Self-employed||$ –||$ 310||$ 608||$ 1,145|
The new “enhanced CPP rates” set to come into effect over the next few years are available on the government’s website and are SUBSTANTIALLY higher than originally announced back in 2019. According to this, employees and employers can expect to pay up to $1,344.90 more in CPP in 2025 compared to 2018. Self-employed individuals get hit twice as hard, up to $2,689.80 more. That’s a 52% increase over 6 years. Crazy math, perhaps enough to rethink your remuneration strategy as a small business owner.
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