CPP and Business Owners

January 1, 2018

CPP and Business Owners

  • Business Income As well if you have any other income such as business investments, rental income, etc., this may affect CPP payments. It is important that your accountant advise you along the way just how important it is for you to pay as much as possible into your CPP as it can make a big difference to a small business owner especially if they have been earning a low income or sought to minimize the tax bite over the years which in the end may effectively have the consequence of reducing CPP benefit during retirement.
  • The Canadian Retirement Income Calculator and your CPP Statement of Contributions within My Service Canada Account can also help you determine the best time to start your CPP retirement pension and get an estimate of how much you might receive.

How much could you receive? The amount of your Canada Pension Plan (CPP) retirement pension is based on how much you have contributed and how long you have been making contributions to the CPP at the time you become eligible. Read more about CPP retirement pension amounts.

A certain number of your months with lowest earnings may be automatically dropped from the CPP retirement pension calculation under the general drop-out provision. This may help increase the amount you will receive.

You can also request the child-rearing provision which may increase your retirement pension amount if you had zero or low earnings because you were the primary caregiver raising your children.

Credit splitting may affect the amount of the CPP retirement pension for both you and your former spouse or common-law partner.

Notes: If the cost of living goes up, so does the amount of your CPP benefits. Your monthly benefits are adjusted every year in January based on the Consumer Price Index

 

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