The Canada Pension Plan (CPP) offers contributors and their families partial replacement of earnings in the case of retirement, disability or death.
Almost everyone who works in Canada (outside of Quebec – where the Quebec Pension Plan (QPP) provides similar benefits) contributes to the CPP.
Canadian workers are typically required to contribute 5,1% of gross pay in CPP for each pay period.
- ‘Do I have to pay it?’
- ‘Can I claim a CPP refund?’
- ‘How much will I be due?’
All of your questions answered!
How can I tell if I am contributing to CPP?
Easy. Check your payslip!
You can see your CPP or QPP contributions in boxes 16 and 17 on your T4 Statement of Remuneration payslip.
Employers in Canada have to deduct CPP contributions from their employees’ pensionable earnings. Some exceptions from this rule are:
- casual employment, if it is for a purpose other than the usual trade or business;
- less than $250,00 cash payments in a calendar year, paid to agricultural workers;
- employments as a teacher on an exchange from a foreign country;
- employment in a rescue or disaster operation, as long as the person is not regularly employed for that purpose;
I do not intend to retire in Canada. Can I claim a CPP refund?
Yes, it is possible to claim a refund of CPP contributions under certain circumstances.
For instance, where you have overpaid CPP you can claim it back with your tax refund. You may have overpaid CPP if you worked for more than one employer or you worked for only a few months in Canada during the tax year.
What’s more, if you earn less than $3,500 in income in Canada during the tax year, you can get the entire sum you paid for CPP or QPP back.
You should note that in case you turned 18 years during the tax year, you can claim only a portion of the $3,500 limit, according to the number of months in the year you were 18 years old.
For example, if you turned 18 years in September 2019, your limit for CPP will be $2,625 instead of $3,500.
Even, if you have not overpaid CPP you can use the amount you have contributed as a non-refundable tax credit or as a deduction from your income, and increase your tax refund (in cases where your 2019 earnings are more than $12,069).
According to the regulations, you are not able to get the whole CPP back, however after you turn 60 years, you can apply and receive pension income from Canada, even if you are a non-resident there.
How can I claim my refund?
You can claim your refund by filing your Canadian tax return.
If you didn’t live in Quebec on December 31, 2019, and you contributed more to CPP than you needed to, you can claim the difference on your tax return.
And if you did live in Quebec on December 31, 2019, then you can claim the excess amount on your provincial income tax return for Quebec.
Where you have worked in a province other than Quebec, you can claim up to $2,748,90 as a CPP non-refundable tax credit on your 2019 income tax return.
However, if you contributed more than the required CPP contributions you can get the overpaid amount of CPP back. The CRA will refund this overpayment or use it to reduce any balance you owe.
If you lived in Quebec on December 31, 2019, and contributed only to the QPP, do not claim more than $2,991.45 as a CPP non-refundable tax credit on your federal tax return. If you contributed more, claim the overpayment on your provincial income tax return for Quebec.
In summary, your refundable amount of the CPP depends on the CPP contributions you made during the year and the amount of income you earned.
Can anyone help me?
If you, like thousands of other working holidaymakers, find Canadian tax to be a confusing subject, you can engage the services of a tax agent to help you.
Even, if you’re unsure whether you overpaid Canadian Pension Plan or not, Taxback.com can provide you with a no-obligation estimate of any refunds you are due. Then, if you like what you see you can proceed and claim your cash!
The average refund that Canadian working holidaymakers receive from Taxback.com is $998.