Canada Pension Plan (CPP) contributions are mandatory for working Canadians between the ages of 18 and 64, but are optional from age 65 onward.

Electing Out of CPP Payments

If you’re between the ages of 65 and 70 and are still working, you can elect to stop making CPP contributions. This election can be filed if the following conditions are met:

• You are between 65 and 70 years of age
• You receive Canada Pension Plan benefits
• You are working and have pensionable employment earnings that require CPP contributions

To elect out of CPP payments, the following steps must be taken:

• Complete a CPT30 form
• Provide a copy of the CPT30 form to your employer
• Send the original CPT30 form to the Canada Revenue Agency (CRA)

Once these steps have been completed, the election becomes effective on the first day of the next month. This means if you turn 65 in May, and you send in the election form on your birthday, your employer can stop deducting CPP from your earnings on June 1.

You can also file this election if you are self-employed, however, instead of filling out form CPT30, you would complete Schedule 8 CPP Contributions and Overpayment on your annual T1 tax return. Similar to employees, you must be at least 65 and the election takes effect on the first day of the next month of the stop date selected.

Considerations for Electing Out of CPP Payments

Deciding whether to continue to contribute to the Canada Pension Plan depends on your overall financial situation, your goals, and many other factors.

CPP contributions are 5.95% of your earnings and both you and your employer each pay this amount. If you are self-employed or own your own business, you pay both the employer and employee portion for a total of 11.9% of your earnings.

Filing this election is not permanent. You can choose to restart contributing to CPP as long as you are still within the required age range, however, the form can only be filled out once a year. If you filed the election this year, you need to wait until next year to start contributing again. As soon as you turn 70, you are no longer required to pay into CPP.

Considerations for Employers When Employees Elect Out of CPP Contributions

If you’re an employer with employees aged 65 or older who want to elect to stop paying into CPP, make sure that they have completed the steps outlined above to file the election. If an election is improperly filed, you and/or your employee could end up owing CRA CPP contribution payments retroactively.

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