CPP contribution limits increase in 2021

The maximum pensionable earnings under the CPP for 2021 will increase to $61,600.

The CRA has announced the CPP contribution limits for the upcoming year. The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2021 will increase to $61,600 (from $58,700). In addition, the employee and employer contribution rates for 2021 are set to rise to 5.45% (up from 5.25%) and the self-employed contribution rate will increase to 10.9% (from 10.5%).

The basic exemption amount for 2021 remains at $3,500.

The maximum employer and employee contribution to the plan for 2021 will be $3,166.45 each and the maximum self-employed contribution will be $6,332.90. The maximums in 2020 were $2,898.00 and $5,796.00.

When Not to Transfers Between Spouses : beware of section 160 tax implication

Under section 160, a transferee of property may be assessed for the tax liability of the transferor to the extent that the FMV of the transferred property exceeds the FMV of the consideration given for the property.
In recent case Brown v. Queen (2020 TCC 45), a transfer between spouses not attract the application of section 160 because the spouse accepting the transfer will give full consideration in the form of assuming a corresponding obligation to pay the expenses of the transferring spouse. That intention should be reinforced with written documentation, appropriate documentary evidence, supplemented by accounting showing that the obligation was properly discharged.
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