Are you self-employed? Here’s what the Canada Pension Plan enhancement will mean for you
As a self-employed person, you are juggling the unique role of both employer and employee. You need to carefully plan for changes that affect your budget. That’s why it is important for you to know about the Canada Pension Plan (CPP) enhancement, which kicks off this January.
Starting January 1, 2019, you will invest slightly more in the CPP to help you build a more secure retirement. The enhancement will increase the maximum CPP retirement pension benefit by about 50 per cent, once mature.
To fund enhanced benefits, annual CPP contribution rates will increase modestly over seven years. The gradual increase is designed to help you adjust.
- On January 1, 2019, your CPP contribution rate will increase from 9.9% to 10.2% of your CPP pensionable earnings.
- You will be able to deduct both the employer and employee portion of CPP enhancement contributions from your 2019 taxes.
- There will be no immediate effects to your CPP benefit if you retire in 2019 or the near future. The increased benefits are over the long term. The amount of increase in benefits you receive will depend upon how much and for how long you contribute to the CPP.