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Wednesday, July 5, 2006. Toronto - Some of
you may have noticed a slightly larger paycheque at the year end. It occurs due
to the payout completion towards your CPP and EI deductions for that
year.
Canada Pension Plan
Contributions
CPP is an earnings-related social
insurance program designed to protect contributors and their families against
loss of income due to retirement, disability or death. It is a good practice to
check your T4 slip every 2/3 years to find out if you are paying more than you
require. Overpayments can be reported on the tax return and may be refunded to
the contributor. This is accomplished by claiming the excess amount as a
refundable credit on line 448 of the T1. Here is the calculation to check:
For 2006 if your income is $42,100 or more - your maximum
required contribution is $1910.70, meaning regardless how much you make above
$42,100, CPP will be $1910.70.
If you make less than $42,100 - follow these steps.
A.
Subtract $3,500 from your income.
B. Multiply A by 4.95% to get your CPP.
CPP is usually shown in box 16 of T4 slip.
Employment Insurance
Premiums
The purpose of EI is to replace part of the
earnings lost by a person during a period of unemployment. It is a good practice
to check your T4 slip every 2/3 years to find out if you are paying more than
you require. Overpayments can be reported on the tax return and may be refunded
to the contributor. This is accomplished by claiming the excess amount as a
refundable credit on line 450 of the T1. Here is the calculation to check:
For 2006 if your income is $39,000 or more - your maximum
required contribution is $729.30, meaning regardless how much you make above
$39,000, EI will be $729.30.
If you make less than $39,000 - just multiply your income by
1.87% to get your EI.
EI is usually shown in box 18 of T4 slip.
