CPP contributions from self-employment are based on the net income of your business. Self-employed individuals are on the hook for both the employee and employer amounts (2 x the annual % to the annual maximum for self-employed persons).
These rates change each year so to be aware of current rates, always check the CRA link. Regular workers contribute a particular percentage of their wages above $3,500, up to an annual maximum, while their employer contributes an equal amount. CPP for Self-EmployedĮveryone between the ages of 18 and 70 whose income is greater than $3,500 must contribute to the CPP. If you are sole proprietor or partner of a business, a freelancer, an independent contractor or even doing Direct Sales as a side gig, CRA considers you to be Self-Employed. Two areas where self-employed individuals differ from regular employees are in contributions to the Canada Pension Plan (CPP) and to Employment Insurance (EI).Įntrepreneurship of some kind has become a way of life for young workers today. If you are self-employed, when completing your personal Income Tax & Benefit Return, your tax situation is less straightforward than that of a typical salaried employee.