Year’s maximum pensionable earnings (YMPE)

A buyer meets this ceiling when setting up payroll for the people who come with the business. Section 18 of the Canada Pension Plan Act sets the amount for each year, multiplying the preceding year’s amount by a ratio, subject to s.18(2) and (3), which round the result and keep it from falling below the preceding year’s amount. The Canada Revenue Agency (CRA) calls it the first ceiling and describes an additional maximum pensionable earnings amount, introduced beginning in 2024, as a second, higher ceiling. Look up the current figures on the CRA’s page rather than relying on an old pay stub.

What to check or ask

• The CRA says the annual maximum pensionable earnings apply to each job an employee holds with different employers, meaning different business numbers. Ask which business number will run payroll after closing.
• The CRA says that where there was an employer restructuring, a successor employer may, under certain situations, treat CPP deducted by the former employer for the year as if it had deducted it. Ask the CRA or a payroll professional whether that applies.
• The CRA has separate guidance for employees whose province of employment is Quebec, so confirm where each employee works.

The pay that counts is covered in pensionable earnings. For the closing-day steps, see how to handle payroll on closing day when you buy a business.