You don't "pay CPP on your taxes", you pay CPP on your "pensionable earnings".
EPSP are not pensionable or insurable.
http://www.cra-arc.gc.ca/tax/business/t ... art-e.html
Jun 18th, 2007 5:32 pm
Jun 19th, 2007 8:35 am
I guess my partnership is not an EPSP then. I may not "pay CPP on my taxes", but I do "pay CPP along with my taxes". Your link shows that CPP and EI should not be deducted from self-employed earnings, just like taxes are not deducted. However, (at least in my situation) it is still the self-employed person's responsibility to pay CPP and tax on those earnings. I would agree that my earnings are not insurable as I do not pay or qualify for EI.ghostryder wrote: ↑You don't "pay CPP on your taxes", you pay CPP on your "pensionable earnings".
EPSP are not pensionable or insurable.
http://www.cra-arc.gc.ca/tax/business/t ... art-e.html
Jun 19th, 2007 6:27 pm
Jun 19th, 2007 10:06 pm
A partnership does not qualify as or for an EPSP. The EPSP is set up to benefit certain employees of a corporation only.knapper wrote: ↑I guess my partnership is not an EPSP then. I may not "pay CPP on my taxes", but I do "pay CPP along with my taxes". Your link shows that CPP and EI should not be deducted from self-employed earnings, just like taxes are not deducted. However, (at least in my situation) it is still the self-employed person's responsibility to pay CPP and tax on those earnings. I would agree that my earnings are not insurable as I do not pay or qualify for EI.
Jun 19th, 2007 10:39 pm
Feb 23rd, 2010 3:36 pm
Feb 23rd, 2010 4:29 pm
Good points, hit the nail on the head IMO !Bullseye wrote: ↑As for the OP, the reason you can't opt out is that if you could, most people would. The average joe would rather blow their money on trinkets and shiny things now than save it for tomorrow, even if they'd be better off with the latter option. The CPP, then, is a tool to protect future taxpayers from the burden of these people later in life, when they are no longer able to work, but now have no savings. Society says it's immoral to let these short-sighted folks live on cat food, shivering in the dark, in their elderly years, even if it was their own doing that got them there.
Feb 23rd, 2010 4:35 pm
its easy..just immigrate somewhere and declare non residency. its very easy to opt outcheech99 wrote: ↑CPP is one of the great ways that the government keeps our wealth locked away from us. 5% growth over 40 years is dismal when compared to historical averages of a well diversified portfolio. Regardless, there are many, MANY reasons why CPP is not good for Canadians who can save for themselves. Here I will illustrate a few of them:
1) Employer Contributions
I am 27 and earn $36,000/year and pay $1,651 to CPP, which my employer has to pay as well. If my employer did not have this expense to employ me they could pay me an additional $1,651 instead of paying to CPP. So effectively the employer contribution I am really making myself. Therefore I am paying $3,303.56 into this ponzi scheme.
2) Reduced Growth
Using the following calculator: http://www.cortrustbank.com/FinancialTo ... ulator.cfm
...I have run 5% and 7% average annual returns over 38 years to take me to age 65.
7% annual growth on $3303.56/yr contributions gives $672,809.89 at age 65.
5% annual growth on $3303.56/yr contributions gives $397,496.47 at age 65
3) Reduced Income
Running the following illustration for 7% and 5% annual growth, then conservatively using 5% annual growth in the years where I am actually drawing income from this plan would give me annual incomes of $33,640/yr and $19,874.80 respectfully. At these income levels I never touch my principal. Compared with CPP that is 2-3 times greater income, depending on your growth assumption.
***Keep in mind that this is assuming that we will never touch our accumulated capital. In reality CPP does not hold an estate value (unless you have a spouse who gets a meager widow pension if you predecease them) so theoretically I should be able to draw down my capital annually toward my life expectancy OR purchase an annuity that will give me a much higher yield than 5% in retirement (Let's compare apples to apples here).***
a) I retire at age 65 and draw as much incoe from my $672,800 (still getting 5% ave growth) as possible for 30 years till I am 95 and I could draw over $43,000/year till I was out of money. If I died before I was 95 anything left would go to my beneficiaries.
b) A single life straight prescribed annuity for $672,800 would easily give me over $50,000 annual income tax-preferred.
4) More Restrictions
Being forced to pay into CPP means I cannot access this program until I am 60-65, even if I need the income sooner due to successful early retirement.
5) No Estate Value
CPP has litte to no estate value, meaning that my children and grandchildren, who could have benefitted from my $672,800 for many years into the future (Assuming I just lived on the income it could provide) will now have to live in poverty and start from near scratch as I had to because the Government stole their trust fund by making me put it into their CPP Ponzi scheme.
If Canadians insisted that the Government that we elect allow us to manage our own lives and insisted that our schools teach children financial management from an early age, then we would be much better off as a Nation. Period. There is so much wealth in this country but your government holds it in trust from you for your whole life and then doesn't pass it on to your desired heirs. But hey, this shouldn't bother you if they never tell you this. I could go on forever but if I can find a way to opt out of this program and stop having the government wipe my bumb for me I would do it in a heartbeat.
Feb 23rd, 2010 6:07 pm
Feb 23rd, 2010 6:47 pm
Feb 23rd, 2010 7:07 pm
Feb 23rd, 2010 7:12 pm
No you should not.
Feb 23rd, 2010 7:38 pm
Good idea in theory, but it's rare for workers to stay with one employer their whole working life. You'd have to have CPP contributions stop and start all through working life to compensate for periods with no plan in place, which would be a nightmare (and costly) to administer.
Feb 23rd, 2010 7:40 pm
Feb 23rd, 2010 8:40 pm
So? You essentially start and stop CPP, EI, and income tax every time you change jobs as it is now. Your old employer stops submitting on your behalf, and your new employer starts contributing. Nothing different would happen when you quit a job, and the only thing different when you'd start one would be that the employer or you could submit a form to opt out of CPP. I don't see that being a nightmare to administer, considering the existing tax code.
Feb 23rd, 2010 9:06 pm
Just a clarification - Sanchez' post could be understood to mean that after you have contributed 43K to CCP in your life time, it is no longer deducted from your pay. However, Sanchez meant that only the first 43K of salary are used to calculate your CCP contribution.
Feb 23rd, 2010 9:37 pm
Exactly my point. These guys thing CPP is so bad, maybe they should up and move to the US, whose SS program is basically free-falling down the toilet.
Feb 23rd, 2010 10:07 pm
Feb 23rd, 2010 10:11 pm
The CPP has been proven several times to be actuarialy solid for at least the next 75 years, possibly more. It is not going to run out of money any time soon, and the average citizen gets back everything paid in, and then some. Go take your nonsense somewhere else pls.cheapcanoehead wrote: ↑The CPP deducted from your cheque isn't growing for you, the government spends it as it comes in on today's retirees.
Feb 23rd, 2010 10:43 pm