Second additional CPP contribution (CPP2)

CPP2 is a payroll line a buyer meets when loading a payroll system for inherited staff or reviewing the seller’s remittances. It sits on top of the base CPP contribution and the first additional contribution.

How it works

The CRA says employees and employers are required to make the CPP2 contribution on earnings beginning at the first earnings ceiling and going up to the second earnings ceiling. The Canada Pension Plan Act provides that, for 2024 and each subsequent year, an employee employed in pensionable employment shall also make a second additional contribution by deduction from remuneration. The CRA says you have to deduct CPP contributions if the employee meets all of its listed conditions: pensionable employment, not being considered disabled under the CPP or QPP, and an age range it sets. It also says to stop deducting if an eligible older employee hands in Form CPT30, an election to stop contributing. The CRA publishes the rates and maximums for each year, so check its current figures. For employees whose province of employment is Quebec, the CRA says Quebec Pension Plan contributions are deducted instead of CPP contributions.

What to check or ask

• Whether the seller’s payroll software applied CPP2 to higher earners
• Whether any staff have Quebec as their province of employment, where the CRA says QPP contributions are deducted instead
• Whether amounts withheld before closing were remitted

See how to handle payroll on closing day and Canada Pension Plan contributions.