CPP and EI Contributions
By default, the required contributions to CPP/QPP and EI are deducted from the client's Employment Income. For various reasons (e.g. a business owner may elect not to contribute to EI) you may wish to disable this functionality.
To enable or disable CPP/QPP and EI deductions in your projections, follow the steps below.
Select Scenario Setup -> Settings -> Income Taxes.
The checkboxes are located at the bottom of the Income Taxes page. Here is an example of the information for a client residing in Ontario in 2024.
Special Cases
- 1
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Your client is EI exempt
Simply uncheck the Pay EI premiums checkbox. Snap will not deduct EI premiums from the Employment Income.
- 2
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A business owner client has elected not to contribute to EI
For example, if an owner of the corporation owns more than 40% of the corporation's voting shares, they may elect not to contribute to EI.
If that is the case, uncheck the Pay EI premiums checkbox. Snap will not deduct EI premiums from the Employment Income.
- 3
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The client is required to pay both Employer and Employee Portions of the CPP
A self-employed person will be required to pay both the employer and employee portion of the CPP contributions.
To model this in Snap you can check the box for Pay CPP premiums (employer portion). Make sure to keep checked Pay CPP Premiums (employee portion) as well.
On the Planning page, the CPP/EI deductions are displayed in the expanded Income Tax section. Make sure this section is expanded (the arrow in the header is pointing left) to see the CPP/EI column.
Suppose the person is self-employed and also paying the employer portion of the CPP/QPP. In that case, you can see the corresponding tax deduction in the Taxable Income Details table under Deductions. Taxable Income Details are accessible by clicking the blue icon at the top of the Taxable Income column on the Planning page.
A Note about the CPP/QPP enhancement
Between 2019 and 2023, CPP contribution rates for employees increased from 4.95% to 5.95% (5.4% to 6.4% for QPP). These are the base contributions (4.95%) and the first additional contribution to the CPP (1%).
In 2024, a new Yearly Additional Maximum Pensionable Earnings (YAMPE) was introduced that is 7% higher than the Yearly Maximum Pensionable Earnings (YMPE). From 2025 onwards, the YAMPE will be 14% higher than the YMPE. The contribution rate on earnings between the YMPE and YAMPE is 4% for employees and is referred to as the second additional contribution (CPP2).
In Snap, contributions will be automatically adjusted to the new contribution rates and earnings ceilings. Please click here for Canada Pension Plan Enhancement details. For clients residing in Quebec, enhancements to QPP are followed.
Individuals can claim a deduction for the enhanced contributions on the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) pensionable earnings made through their employment income. Individuals can claim a 15% non-refundable tax credit for their base CPP contributions.
The deductible amount will also be displayed under the Deductions column of the Taxable Income Details table.