Bill C-26, which enhances the Canada Pension Plan (CPP), has received Royal Assent.
The bill increases CPP contributions for employees, employers and the self-employed, starting in 2019. It adds a new contribution rate of 4% for employers and employees that is applicable to earnings that fall between the yearly maximum pensionable earnings and a new upper-earnings limit. The bill also amends the Income Tax Act to increase the Working Income Tax Benefit and provide a deduction for the new additional employee CPP contributions.
The provisions in Bill C-26 are considered substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) as of October 6, 2016, when it received first reading in the House of Commons (as Canada has a majority government). Bill C-26 is enacted for U.S. GAAP purposes on December 15, 2016, the date the bill received Royal Assent.
In October 6, 2016, Finance stated that Bill C-26 implements the enhancements to the CPP that federal and provincial government leaders agreed to on June 20, 2016.
Bill C-26 increases employee, employer and self-employed CPP contributions in order to fund the CPP enhancements. By 2023, the CPP contribution rate will be 1% higher (from 4.95% to 5.95%) for both employers and employees (2% higher for the self-employed).
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Information is current to December 20, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500