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2008 CPP & EI

This applies to you if you have a regular job with a salary over about $40,000 per year. We all have to pay CPP and EI, these are deducted at source by your payroll. Both CPP and EI have a maximum annual amount, and that payroll does not spread out the amount throughout the year. The net effect is your take home pay is less at the start of the year, until you reach your maximums.

In 2008, CPP employee contribution rate is 4.95%, same as last year, and the maximum annual pensionable earnings has gone up from $43,700 to $44,900. If you work it out, with the basic exemption, you have to pay $2,049 CPP in 2008.

For EI, the maximum annual insurable earnings has gone up from $40,000 to $41,100 and the EI rate has gone down to 1.73% for 2008. If you calculate that, you will need to pay a maximum of $711 for EI in 2008.

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In the above table, you can see that for an income of $50,000 annually, you have reached your maximum at 9.9 months. Which means that for November and December you get an extra $278 in your pay - just in time for holiday spending or topping up your RRSP.

The more you earn, the sooner you reach your maximum CPP + EI. At a salary of $100,000 you get an extra $556 per month from June through to December. Even more to put into your RRSP...

An excel file of the calculations is found here

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For CPP info, check here, for EI info check here

Pat

 
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