As of 2015, the Canada Pension Plan contribution rate is 9.9 percent, which is split between employers and employees, and the Employment Insurance premium for employees is 1.88 percent, explains Smith, Sykes, Leeper & Tunstall LLP. Quebec's Employment Insurance rate is 1.54 percent, according to the Canada Revenue Agency.Continue Reading
Contributions to CPP are split equally between employees and employers, at 4.95 percent each, according to Smith, Sykes, Leeper & Tunstall LLP. Businesses contribute to EI at 2.632 percent, instead of 1.88 percent. As of 2015, maximum pensionable earnings for CPP are $53,600: maximum insurable earnings for EI are $49,500, states the Canada Revenue Agency. Self-employed individuals have to contribute to CPP the full 9.9 percent on their net business income; they may also make payments into the EI program if they wish. Self-employed individuals calculate their CPP and EI contributions on their yearly tax return.
Many businesses try to classify some workers as contract workers in order to avoid paying CPP and EI premiums, reports the Financial Post, which has resulted in a number of court cases. To be considered self-employed, a person must have large degree of control over his employment and not be entirely integrated into another person's business, explains TaxTips.ca.Learn more about Financial Planning