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[HR] Changes to Statutory Payroll Deductions 2019

As 2019 rolls in, businesses should be aware of the following changes that come into effect this year, that may impact your payroll process and your employees pay-cheque statutory deductions. These changes are as follows:

  • Your Canada Pension Plan (CPP) contribution increases – Employees will see is an increase in Canada Pension Plan premiums beginning this year (2019). This is the first of five years of increases to pay for future enhancements to the Canada Pension Plan.
    • Prior to January 1st 2019, you contributed 4.95% on employment earnings between $3,500 and an annual earnings limit (adjusted each year based on changes in the average wage in Canada – In 2019 this limit is $ 57,400), and Employers make an equal contribution. From 2019 to 2023, the contribution rate for employees will gradually increase by one percentage point (from 4.95% to 5.95%) on earnings between $3,500 and the annual earnings limit. More details at – https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhancement.html
    • Step 1: 2019-2023

      From 2019 to 2023, the contribution rate for employees will gradually increase by one percentage point (from 4.95% to 5.95%) on earnings between $3,500 and the original earnings limit.

      Year Increase Increase Employer/Employee Rate Self-Employed Rate
      2019 0.15% 0.3% 5.10% 10.2%
      2020 0.15% 0.3% 5.25% 10.5%
      2021 0.2% 0.4% 5.45% 10.9%
      2022 0.25% 0.5% 5.70% 11.4%
      2023 0.25% 0.5% 5.95% 11.9%

      Step 2: 2024-2025

      Starting in 2024, a second, higher limit will be introduced, allowing you to invest an additional portion of your earnings to the CPP. This new limit, known as the Year’s Additional Maximum Pensionable Earnings, will not replace the first earnings ceiling. Instead, it will subject your earnings to two earnings limits. This limit is referred to as the second earnings ceiling.

      This new range of earnings covered by the Plan will start at the firstearnings ceiling (estimated to be $69,700 in 2025) and go to the which will be 14% higher by 2025 (estimated to be $79,400). Like the first earnings ceiling, the second will increase each year to reflect wage growth.

      Note: This additional range will only affect you in years when your annual earnings are above the first earnings ceiling.

  • Employment Insurance (EI) premiums, on the other hand, are expected to drop by four cents for every $100 of insurable earnings. More details at – https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/premium/rates2019.html

Please note that the actual amounts the each employee sees on their respective pay-cheques will vary based on individual earnings.