Understanding the QPP and CPP Maximum Contribution Calculation for a Multiprovincial Employee
Context
It is possible for you to have employees working in Quebec and other province(s) and/or territory(ies). In the past, the first maximum amount achieved was the moment when calculation stopped. However, since January 1, 2019, if you move an employee to another part of Canada, or vice versa, before the end of the year, you must use a new formula to reconcile the contributions for both the Canadian Pension Plan (CPP) and the Quebec Pension Plan (QPP), and keep them under or equal to the maximum.
Maestro* does the contribution calculations for you. Nonetheless, you will find the formula used to make those calculations below, in order to help you understand the employee's contribution amount and answer questions he/she/they may have. Furthermore, in order to declare contributions to the CPP, additional box redefinitions must be done for the RL-1 report.
|
The changes to the maximum calculation formula for CPP and QPP contribution for a multiprovincial employee has been in effect since January 1, 2019. The Canada Revenue Agency (CRA) expects all employers to fully comply to those changes starting January 1, 2020. |
Steps
To calculate the remaining contributions an employee may contribute to the CPP, you must convert the QPP contributions into CPP contributions. The same can be done the other way around, you just need to modify the formula, converting CPP contributions to QPP contributions.
Formulas
QPP contribution up to date * (CPP contribution rate / QPP contribution rate) = CPP contribution up to date
OR
CPP contribution up to date * (QPP contribution rate / CPP contribution rate) = QPP contribution up to date
|
Example (using 2019 contribution rates) Employee's QPP contribution up to date: $142.62 Converting this amount into a CPP contribution: $142.62 * (0.0495 / 0.054) = $130.74 QPP contribution transformed into CPP contribution For 2019, the CPP contribution maximum is $2593.80 Therefore, the maximum CPP contribution amount is $2593.80 - $130.74 = $2463.06 |
Concerning the T4 slip, no additional box needs to be configured. For the RL-1 slip, however, you must declare all contributions and gains entitling to a pension with the CPP, using the B-1 codes for the CPP contributions and the G-2 box for the CPP eligible salary.
See Also
- For more information concerning this calculation method, please use the following guide: T4127 Payroll Deductions Formulas.
- The Employee who Reports to work at one of your Establishments Subject to the Canada Pension Plan (CPP) and at one of your Establishments Subject to the Quebec Pension Plan (QPP) document could also be helpful.
- For more information concerning box redefinition, please refer to the How to Redefine Boxes.
