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Before 2012, if you were receiving CPP (Canada Pension Plan) retirement benefits, or disability benefits, you were not required (actually you could not even
you wanted) to make CPP contributions if you worked or were self-employed.
After 2011, if you receive CPP disability benefits, the rules remain the same - you don't need to pay CPP.
However, if you are receiving CPP retirement benefits, the rules have changed.
If you are under 65, you have to make CPP contributions, and your employer has to contribute the same amount.
After you turned 65, you have an option - you can elect to stop CPP contributions by signing
form CPT30, or if you are self-employed only (no income from an employer),
you can simply specify a date to stop CPP contributions on your return. The signing date of CPT30 has to be after your 65th birthday. You only need to
send CRA one copy of CPT30 and it will stay in effect until you turn 70 years old (at that time you don't need to pay CPP anyway). These are the general
rules. The details are as the follows:
If you have employment income only, you need to sign a CPT30 and give it to your employer as well as sending it to CRA. The form indicates that your employer
should stop withholding CPP AFTER CPT30 is received. However, CPT30 itself does not need anyone's approval, and as long as CRA gets the form
within reasonable time frame, your choice will be recognized. Your employer will also be very happy to stop your CPP as early as legally possible because he/she has
to pay equal contributions. Here is an example, if you turned 65 in May, 2012, your earliest stop date is June 1, and you only need to contribute to CPP from January to May.
If you forgot to give a copy of CPT30 to your employer until October, you can still choose an earlier effective date, say May 31 (if you signed CPT30 then)
and hand a copy to your employer. Your employer can adjust the numbers on his/her payroll account to reflect that June 1st is the day to stop
your CPP; even if he/she did not adjustment the numbers on payroll account and/or
your T4 slip correctly, you can still get a refund for your excess CPP contributions on your tax return based on your CPP payable months.
If you are self-employed only, you don't need to send CRA a CPT30, instead, you can specify the month you want to stop CPP contributions. Suppose you turned 65
in May, 2012, you can elect May as the month to stop CPP - yes, compared to working employees, you can pay one month less CPP, so you only need to pay CPP for
four months, from January to April.
If you have both working income and self-employment income, first, you have to complete form CPT30 (and send it to CRA). Without a CPT30, you have to
pay CPP all year and you can't specify a CPP stop date on your return. If you have completed a CPT30 already, the date on your CPT30 can be used to dictate your CPP
payable months. However, for whatever reasons, if you are eligible for less CPP payable months dictated by CPT30, you can then specify an earlier date on
your return to make your CPP payable months less. For example, if you turned 65 in May, your earliest CPT30 effective date is June 1, even you had given your CPT30
to your employer in November, if you were self-employed,
you can specify May as your CPP stop month so you only need to pay CPP for four months. This 4-month applies to both your employment income and self-employment
income. If you paid more CPP through working than the 4-month period required, you will get a refund. The bottom line is you have to have a completed CPT30
that is or will be on CRA's record within reasonable time period.
Related: CPP - Pension or Tax?
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