I just efiled a new client’s return who is 68 and self employed. The express NOA came back with a much lower balance owing and upon investigation, I noticed that she was no longer required to pay CPP. I can’t find anywhere in her CRA My Account that says she elected to stop paying it. Why did Taxcycle calculate CPP? Shouldn’t Taxcycle have given me a review message? This is an embarrassing mistake that I would like to avoid in the future.
Not a Taxcycle issue.
Would have elected in a previous year to not pay into CPP any longer.
A properly completed S8 would have triggered no CPP the self employed earnings.
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Of course, you have to know this election has been made. For those self-employed and over 65, you need to ask that quaestion for your file.
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This is one item that would be nice to have available on RAC but it is not.
The month and year of the election can be obtained from the EFile help desk though. I have found some agents need to be pressed on it as some agents are not aware that this information is available to them.
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Yes it should be on RAC! My mistake was not asking my client if an election had been made and not digging deep enough into prior year returns I guess. But she didn’t know the answer anyway. Her return was done by a big firm in the past and surprisingly she had no clue what they were doing!
For a new client, TaxCycle can’t possibly know if a self employed individual elected to stop paying CPP at some point after they turned 65. The best TaxCycle could do in that case would be a diagnostic message to the effect of “Taxpayer is over 65 and CPP has been calculated. Have they elected to stop CPP contributions in a prior year?”.
For an existing client, TaxCycle does in fact keep track of the year they filed the CPT30 (employee) or if they elected on Schedule 8 of their T1 return (self employed individuals).
Presumably, if a person had RAC access they could manually determine from prior NoA’s whether the client was still contributing to CPP.
If I was a numbers person… I’m not sure there would be too many circumstances in which I would think it was a good idea for a self employed individual who has reached the age of 65 to continue to pay CPP once they have started collecting it.
For 2022 the maximum CPP = 3,499.80 x 2 = 6,999.60
The maximum annual post retirement benefit is about $355
Ignoring the NRTC, the deduction for CPP (as well as the PRB being taxable income) the break even point seems to be about 19.72 years. Of course this also ignores the rapidly depreciating purchasing power of the dollar… which could add several more years to the break even.
If I was 65 and making the maximum CPP contribution for the year I’m not sure I’d be that thrilled knowing that I’d make my $7k back by the time I turned 85. Seven thousand dollars in 20 years likely won’t even buy a buggy full of groceries.
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