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Rate changes in 2020: what you’ll pay in CPP and EI

With a new calendar year, there are going to be several changes to your tax bill – both good and bad. Here is a list of new rates you’ll pay at the federal level.

CPP / QPP

Premiums for the Canada Pension Plan and Quebec Pension Plan will start to increase in January from 5.10% of your employee's earnings (5.55% in Quebec) to 5.25% (5.70% in Quebec). You'll pay those premiums on earnings up to $58,700, up from the current cap of $57,400. 

We’ve fought these increases, which will keep going up for five years. While these increases will negatively affect your bottom line, it could have been much worse if had CFIB not been there. We are continuing to ask for compensation measures and will keep pushing for better retirement savings policies. 

How much will CPP hikes cost your business?

 202020212022202320242025
Earnings = $27,450$72$120$180$240$240$240
Earnings = $55,900$157$262$393$524$524$524
Earnings = $85,000$170$292$452$622$830$1,050

($ amounts per employee; amounts double for self-employed)

Employment Insurance (EI)

With the country facing relatively low unemployment, EI rates will actually go down next year! You will still be paying 1.4 times what your employees pay – so CFIB is keeping up the fight to bring more fairness to the EI system for your business!

EI RATES (per $100 insurable earnings)

 20192020
 QuebecCanadaQuebecCanada
Employee rate$1.25$1.62$1.20$1.58
Employer rate$1.75$2.27$1.68$2.21

Lifetime Capital Gains Exemption (LCGE)

The LCGE, the amount exempt from taxes when you sell your business, will be $883,384 next year. The exemption has been tied to inflation since 2015, thanks in large part to our advocacy!

There is one exception to the LCGE: farms and fishing businesses, where the exemption is $1,000,000 and not tied to inflation. We’re still fighting to have that larger exemption applied to all businesses. 

As you start planning for 2020, our business counsellors are always here for you if you have any further questions!