Personal Finance

CPP contribution changes 2012

  • Last Updated:
  • Nov 22nd, 2013 8:36 am
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[OP]
Newbie
Nov 27, 2010
33 posts
1 upvote

CPP contribution changes 2012

My husband decided to take CPP earlier than 65 years old and received a form to be presented to the employer that as a CPP recipient no CPP deductions are to be made. This ruling apparently changed in January 2012 and he turned 65 in September 2012.

I have to assume that Source Deductions sent out information about this change to employers and if so this info was not read and consequently no CPP was deducted from January to September. Source Deductions now claims this amount + interest + penalties from the employer. As an employee is not the contract partner in this issue no information was sent to my husband.

His employer now claims the un-deducted CPP + interest + penalties from my husband.

What is the view on the legal implication on this issue, i.e. I can to a certain degree understand the CPP deductions but definitely not any interest or penalties as the were not created on the employee side.

Interested in input in this matter as I can see that this is not an isolated case about this issue.

apimom
3 replies
Sr. Member
User avatar
Dec 12, 2012
645 posts
371 upvotes
Courtenay
apimom - Collection of CPP contributions is the responsibility of Revenue Canada, so it's a little bit outside of my area of true expertise. I would therefore strongly recommend contacting Revenue Canada to see what they say. In the interim, I'll give you my 2 cents anyway.
I agree that the employer is totally responsible for remitting their share of the CPP contributions (4.95% of earnings above the YBE up to the YMPE), as well as any interest and penalties resulting from not having done so.
I also agree with you that your husband would be responsible for his own share of the contributions (same amount as above). There may also be interest and penalties on his side, as whoever completed his 2012 tax return also should have caught this omission.
You don't say, but I'm assuming that your husband didn't work past September. If he did, contributions after age 65 would have been optional, but the default is contributions would continue unless he opted out by completing a form CPT30, as per this link: http://www.cra-arc.gc.ca/E/pbg/tf/cpt30/
On the upside, once these contributions have been made, he will be eligible for additional post-retirement benefits and they should be retroactive to January 2013.
Jr. Member
Sep 10, 2010
154 posts
27 upvotes
The employer is within his rights to go back and collect those CPP deductions from your husband. However, the employer cannot charge your husband for the penalties and interest. It is the employer's responsibility to ensure deductions are done properly (unless the employee provides misleading information). If the employer failed to do so, we assess penalties to the employer.
[OP]
Newbie
Nov 27, 2010
33 posts
1 upvote
RWAC - exactley my thoughts on this. And "whoever" completed the 2012 tax return was me as I have an official document from Source Deductions that after receiving early CPP no deductions can be made for CPP. Yes, after 65 no contributions have to be made. The Post Retirement Benefit does not outweight by any stretch contributions actually made.

My issue is the payback based on the fact that an employee is initially informed about not paying CPP but no information is given to an employee about this fact being changed. It is/was - I assume - sent to the employer. This prevents the employee from avoiding the payback situation with all its implications.

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