Question

Jane works in Ontario and is paid on a bi-weekly basis. She has the following type of earnings & benefits. Determine which are pensionable and insurable and then calculate the CPP and EI deductions.

1. Regular $1600
2. Vacation Pay $500
3. Night Shift Premium $25
4. Group Life – Employer paid Taxable benefit $15

Answer 1

Ans:

Pensionable and Insurable:

According to the Government of Canada, the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2019 are $57,400—up from $55,900 in 2018. Contributors who earn more than $57,400 in 2019 cannot make additional contributions to the CPP.

For most people, the basic rate for calculating benefits is 55% of the weekly average insurable earnings. Effective January 1, 2018, the maximum yearly insurable earnings is $51,700. This means that you can receive a maximum amount of $547 per week. These amounts are reviewed each year.

Hence

CPP: Jane's salary = $1600 x 52 = $ 83,200 and this is more than capping amount of $ 57400, so jane is cannot make CPP contribution. hence CPP of Jane is Zero

EI: insurable earning is $ 51700 x 55% = $28435