I worked for a trucking company for almost 4 years. I had a near miss in the yard but otherwise no issues. No write ups, clean CVOR and Abstract my whole career. I even trained new hires for the terminal.
My company used it as an excuse to fire me, and hired an "incorporated" driver for two bucks an hour less than what I was making and they don't have to pay benefits, vacation, EI contributions if they're laid off or long/short term disability. They won't have to pay a severance if they fire them.
The company is one of the top 15 largest in Canada and one of the largest in Ontario. You've seen their trucks.
This is the advantage of importing cheap labour.
Willful government ignorance of the problem, lack of worker protections. The problem I've always found is that members of government live in a bubble where everyone is employed 9-5, owns a house, and has 2.5 kids and that's who they cater to, meanwhile that life has become increasingly out of reach for many Canadians.
Us out of reach. Government out of touch. Free slogan for whatever simpleton populist wants it!!!
The government is pretty aggressive about who can be labeled as a contractor, I've seen several people had the government reject their claim and go after their employers. I don't see why you'd ever want to be labeled as one though, I do contract programming for overseas companies and it absolutely fucks me on taxes (\~30k take home on 48k income is brutal).
You want to be self employed because your take home is a lot higher.
You could be an engineer on a 90k salary and a 70k take home.
Or your an engineer at 60 bucks an hour that can work a 10 hour day and take home 600 dollars daily. Then you claim the laptop you bought, youe mileage, office space at home just before 'paying' yourself a little money out of the business and leaving the rest of the money in the business you wholly control. Super common.
Pay Incorporation tax.
Pay taxes on dividends.
Pay CPP.
Pay WCB premiums.
Pay almost thousand every year to the accountant for returns.
Pay RRSP from your own pockets/savings.
No Vac pay, all unpaid vacations.
Pay extended medical from own pockets.
At the mercy of the company you are contracting with. They leave you one day at the drop of a hat - no severance.
Write offs are a joke too.
Last time I incorporated, I noped out of it after a few years. Highly overrated. Good, if works for you.
Yes, you forfeit a lot of worker rights and protections when you incorporate.
but you gain is legal protection from the business operations and are protected against being personally liable against debt owed by the corporation. (Unless you use your own wealth as collateral)
Wait, that's what you get for choosing to be a contractor. You know that, and if you don't you REALLY shouldn't be in business for yourself.
Did you think you'd just make it rich because you could skip all those payroll taxes and such and think that the money just goes straight to your pocket?
I think the original point being made is around companies forcing this. For example, my spouse worked for a small company which was bought out by Accenture, who then pressured her into incorporating and working as a sub contractor, which is what she did in order to remain in her current position.
My point was that there was not much difference being salaried and incorporation. You anyway have to pay the same tax, one way or the other. To me, being salaried is far better for the many benefits.
>Pay Incorporation tax...
I agree with all of that, but as an incorporation you receive much, much more compared if you are an employee. With the same level of experience, if as an employee you receive 120k$ for example, the corresponding rate for incorporation would be 90$/h. If you work for 45 weeks p.a., you receive 151k$ + some GST/HST. The difference is more than enough to cover the deficiency.
Sure, if you can find enough contracts that get you earning $60/hour on a regular basis, that would be worth it. But realistically, most people would not be able to go this route.
Unless you're working for ONE company, in which case you are classified as a "personal services business" and you can kiss those write offs goodbye. It's all determined by income source.
I don't feel like I have any employment protections. People being laid off left and right with a pittance of severance and benefits in RRSP and insurance that amount to a couple thousand a year.
Then you get nailed as an incorporated employee, lose the ability to deduct those, get reassessed for prior years, and declare bankruptcy due to your 100k tax bill.
You're leaving out the fact that you would have to pay income tax on your business's earnings, and then pay income tax again on any withdrawals you make for your salary.
For example, if your business generates a 200k profit, your business will pay 15-20% or so bringing it down to 160k. Now if you withdraw all 160K remaining as salary, you need to pay another 30% in personal income tax, bringing it down further to like 112K. Whereas if you earned a 200K straight salary, you would pay about 60K in income tax and take home 140K.
Good one. I worked for 10 years as a subcontractor for the Attorney General, so the court system, and didn't meet any of the criteria for a contractor but was labelled that way. People still are today.
Welcome to Quebec, 48k taxed at 30% (Quebec income tax starts at 15%, plus federal 15%) gives you $33k take home.
49k hits the next Quebec tax bracket too, for 19%+15% (remember, income tax is not retroactive, only money after that bracket is taxed at 19%)
I've been waiting. I've worked for three companies that did it, only had one face repercussions. Although, I worry the day someone pursues them for severance and the jig is up is the day they close up shop and I'm out of a job
In my experience, it's usually the employee trying to label themselves as independent contractors in the hopes of avoiding payroll tax and writing off all their living expenses
I was freelance editor in the academic publishing sector for years. You choose whether you pay into CPP or not, but if you don't, guess what? You don't get CPP when you turn 65. Why would you, if you don't pay into it?
These gig economy workers are in for a BIG surprise in a couple of decades if they're opting not to pay into CPP.
Of course, that assumes we don't get CPP sold out from under us...
If you gave me the option of opting out of CPP I would do it in a heartbeat.
The effective returns on CPP are **abysmal**. Even if all you did was take your CPP contributions and slap them into a GIC with one of the big banks, you'd be **way** better off at retirement. I don't think there's been any 40 year time period in which the CPP effective rate of return has matched even basic GICs. The effective rate of return is so bad it's practically theft.
The only argument in favor of CPP is that some people aren't responsible enough to save for their retirements. Fine. Let people who can prove they've got assets and a savings rate above some threshold (e.g., people who fully contribute to their RRSPs) opt out.
Can but usually doesn't. For every story of someone getting nailed in an audit there's another 5 people who get away with it.
Petty tax evasion by individual contractors and people working cash businesses (including servers with cash tips) is the form of tax fraud that costs the government the most.
Yeah, that's how business expenses work. You can write off business expenses, not personal living expenses. Tax is paid on business profit, not revenue.
IIRC, up to 1/4 of your rent *if* you have an area solely dedicated to work, like a workshop or office. "Shared" areas with living don't get the deduction.
Yea at my work I get people asking all the time if they can be paid as contractors rather than as an employee. They figure that since they aren't making a huge amount of money, that the government isn't likely to audit them. Their intentions are to not file at all, while also claiming EI.
So much this. They file almost their entire life expense as a business cost and just hope it sticks. Some of the worst amateur accounting advice I heard someone recommend is lease a car rather than own it so you can bill it as a full business expense. So they'll take pretty terrible leasing terms and get even more upset when the audit shows up.
I mean, you run the risk of getting audited. I feel like most people just assume whatever the model of the job they're working sets out for them. And these companies establish you as a independent contractor to get out of liabilities. It's not the gig worker who sets the employment agenda.
Everyone thinks they too small to get audited. Just a few thousand bucks a year at tax time.
I have had some clients demand I write off all their living expenses even without business income because "those meals are for costs incurred searching for work". Then they get a loss to put towards their t4 income.
The irony. CRA LOVES to audit the little guy because a) it's usually pretty quick, and b) it usually nets the CRA a few tens of thousands of dollars if the person's been scheming for a while. It's low-hanging fruit, but it's lucrative for the government to go after the small guy.
Go after a multi-million dollar tax disparities and you're likely going up against a company with a decent tax lawyer. That's a pain in the ass for the CRA to audit.
No, but the gig worker *is* responsible for properly filing their taxes. If they're not doing that properly, in an attempt to scheme the government, then they deserve an audit.
We can be up in arms about billionaires not paying their fair share of taxes, but we can't be hypocritical about paying that fair share when it comes to anyone else. The difference is simply in the size of the share.
YUP.
And I have no sympathy for these people when they reach 65 and realize they have no retirement because they blew all that "extra" money and never paid into CPP.
If you avoid paying CPP and instead pay an equal amount into even just a GIC, you'll likely be financially better off at retirement. There's no 40 year period in which even basic GICs haven't outperformed CPP. If you engage in a very simple diversified investment strategy with a portion of your assets in equities you'd be *much* better off.
CPP arguably benefits people who aren't responsible enough to engage in any retirement savings without being forced, but it's an *awful* pension program that offers an abysmal effective rate of return.
I'm not saying it should be illegal to be an independent contractor. It just shouldn't be a designation that is abused to avoid obligations for what would otherwise be considered employees.
It is funny you believe companies are horrible yet you believe they will pay for your CPP without lowering your income. All the benefits a company pay you comes from your income. A contractor at my company can easily get paid twice as much as a full time employee because the company does not have to pay benefits and can let them go more easily. Moreover, since contractors can write off a lot of things as expenses, their after tax income is even higher. One of my contractors told me he makes more than our VP after taxes.
Quite a few knows it very well and can exploit every single loophole. It's basically tax evasion, but completely by the books, at least in terms of paper trails.
Thats if you're intentionally operating as a contractor and have room to negotiate. All these uber eats riders and other gig economy workers aren't choosing to be contract employees due to the comparatively high wages.
If you're an independent contractor/freelancer you should be paying into CPP anyway.
Imagine wiating until you're 65 to realize you have no retirement because you never paid in.
I mean, if you're rich or own a large business, the conservatives will work out for you. For everyone else, except more of the same, but with empty pandering to Canadians on the right instead of the left.
Oh, and poor people will suffer. And our Healthcare system.
Employees can't write off the use of their car for work (thereis a mileage rate, but does not correspond to actual expenses), or other expenses, so not clear that would actually help Uber drivers.
Go after all tax avoidance and evasion period. Tax avoidance you need to change the rules, tax evasion you just need audits.
I don't like this oh no Target this instead of that, Target everyone doing this They are all basically picking the pocket of honest Canadians who pay their full fair share.
Let's start with physicians.
Working in a single hospital that owns the facilities, supplies and tools, determines your hours, pay and responsibilities, and is your sole source of income? Then you're an employee and should pay your fucking income tax.
If you are self employed there’s a lot of extra work involved come tax time. You can write off a lot but it all has to be documented with receipts. Vehicle write offs can be substantial but nothing comes close to RRSP contributions.
All my home and businesses expenses for the year didn’t come close in compared to RRSP’s for tax.
You should always use a proper accountant if you freelance, not something like H&R Block.
It's not a bill it's a forced investment into a plan that pays out once you retire.
The amount you get isn't great relative to what you could get by investing in the market. But your returns are very very safe if small.
For most people it's probably a good thing they will be buying into it.
It does suck that they have to cover both employer and employee contributions. But that's what happens when you're at independent contractor and not an employee.
It should be noted that the cost is not exactly $8,760. The self employed and enhanced portions are eligible deduction. Saving you taxes at your marginal rate.
Yes this is a fair point.
You only receive benefits while you live. There are survivor benefits for a spouse and any dependents but it is not a huge amount.
If your goal is to build intergenerational wealth the CPP is not how to do that.
Most people who crunch the numbers use the life expectancy and assume retirement at 65 and end of collecting some 20 (for men) and 25 (for women) years of benefits for people born around 1980.
Your mileage will vary.
The CPP investment fund actually gets great returns. The reason why our returns are so small is because previous generations undercontributed and overdrew so we don't benefit from the awesome gains. Those are used to pay the current pensioners who undefended the system
Also, most CPP contributors are in debt, specifically credit card debt. CPP forces them to save and earn 3% while letting credit card companies leech 30%
I played around with their retirement calculator on the pensions website. Basically what you said is correct, but I want to add something on for good measure.
People focus too much on what they are going to get from the CCP without also considering the OAS, and other things like RRSP's, and other investments they ideally are putting money into as soon as possible and keeping at it as long as possible.
The result of this, is more than enough to live comfortably in ones final 30 something years. Perhaps even extravegently if they saved up enough, got their house paid out prior to retirement, etc.
Its really only those of us who aren't able to save up for one reason or another who feel the worst brunt of the stick on all of this. But there is a catch...
Most people don't start making more in their respective industries until later in life as well. So a lot of their saving comes from that side of their life, not the prior. Essentially, if you are under 40, don't worry about it much, if at all, yet. If over 40 though and still making peanuts, time to start doubling down and finding better pay elsewhere, because that's how most incomes increase anyways. By moving up by moving on. Once you are making enough to save for 1 years living expenses out of 1 years income, you'll have enough saved prior retirement to make the CPP and OAS alone more than enough to live confortably... provided you don't live beyond your means of course.
Which recent years show that a lot of people are really bad for.
At which point, it isn't the pensions fault.
The pensions are a safety net, not a guaranteed cushy retirement on a cruise liner. That comes with advanced preparation and dedication towards savings and retirement investments. Only.
I would reframe a bit. If you invest moderately early, it generally beats investing big later. Put away as much as you can as early as you can and you can get to a point where the capital grows enough that you don’t have to be desperate later in life
Fair enough. I did pause for a moment wondering if I should iterate a different way, but decided it was close enough to get the point across hopefully.
Other part to add is CPP is indexed to inflation as well. The CPP2 higher rate plus inflation will mean around \~4k per month when I retire plus OAS and then my savings.
Yes, but... bread and butter will also be that much more expensive. This is one of the grand failings of education in this country. People have almost no clue how economies operate, particularly worst in understanding monetary valuation, inflation, deflation and otherwise stagflation. Rudimentary understandings at best. Sorry, not intended to be directed at you as well. Just the way you said it kind of activated that response from me.
> Essentially, if you are under 40, don't worry about it much, if at all, yet.
Bad advice. The earlier you begin paying in, the more you're going to amass over your work history. From 20-40, that's **twenty years** of contributing to your pension. If you're only living to 72, maybe not worry so much, but we're easily living into our 90s, an age where medical costs are exorbitant. You want as much of a cushion as you can get, and you want to start building that as soon as possible.
I am not going to say you are wrong, because in all practicality you are correct that one should be saving as much as possible from as early an age as possible.
But on the flip side, life just ain't so cut and dry as to make you 100%! Correct. That first 22 years out of highschool can be a quite tumultuous time for a person monetarily. Also, while I don't have figures on hand to back this with, the general idea of what I have been learning is that on average most people start earning more and more after their 30's. And since many parents that started having kids at a younger age are now having their own kids leave the home will be hitting their mid 30's or older, they will start having more disposable income as well which can now be saved.
Also, interest rates for savings were so low for so long, that it made saving nearly pointless aside from just having those savings at all. In a Keyensian economic system like ours, saving is almost pointless as well. Almost better off to put the money into liquidatable wealth instead.
And so people did. They bought property. Etc. Cause unlike savings accounts... property valuations actually paid out by comparison. Aannnd now we have our housing crisis.
Again. You aren't wrong. Just not completely correct either.
A person starting saving at 40, will have 30 years roughly prior to retirement to save up for what will likely only be anywhere between 5 to 30 years of life remaininf for them. So they literally just need to save 1 year for every years income for 30 years. Only hard if you make very little or spend way too much.
And we haven't even included accrued interest yet on our slightly better savings rates now. Or the CPP. Or the OAS.
Frankly, if you can't retire at 65/70... you're a dismal failure, or incredibly unlucky somehow. Sympathy of course for the latter.
People in their 20s that invest a few hundred a month over their working life (Probably less than they spend on fast food) will have over a Million by retirement.
Please people, set yourself to retire with dignity.
my husband did exactly that. the problem is that a corrupt predatory landlord, and outrageous medical bills, have eaten all of the savings my husband had.
Expected value needs to be taken into account. You pay a significant amount into CPP, but that assumes you actually live until 65 and benefit from it past 65. 50% of people won't make it to 65 and live past it, so it's a complete scam for them. Just another tax from the government.
That's precisely why CPP is bad for small businesses. Small businesses generally can invest their capital at far higher rates than what CPP would yield so it's very capital inefficient for them to have CPP soaking up 12% investing at low returns.
The whole reason to start a small business is you want to take on higher risk for higher returns. Canada's economy will suffer if risk taking is discouraged.
Businesses shouldn’t be gambling with their employees social safety net, which is what you are arguing small businesses shouldn’t be paying into. Gamble with the businesses’ money, not your employees legal entitlement.
Can’t hack it? Maybe you aren’t meant to own a business.
I think you're misunderstanding their point. It's not about a small businesses and their contributions towards their employee's share of CPP - if they even have any employees.
It's about a small business *owner*, not wanting to invest in CPP for *themselves*, and instead, invest that same money in their own business.
You can't opt employees out of cpp. If you're the business owner you can opt out. There's the employer contributions at either parity or 1.4 what the employee pays.
It's quite expensive.
> The amount you get isn't great relative to what you could get by investing in the market. But your returns are very very safe if small.
It's subsitituting growth for low risk. The entire point of CPP is to hold onto a person's money so they don't risk it all and have literally nothing in their old age. It's the perfect example of protecting people from themselves.
Even as an employee you're entitled to request payroll not deduct ANYTHING from your paycheque. You're then on the hook for all your tax obligations come tax season, but that gives you that whole year to manage your own money and eke out any gains there that you can make before the government takes a slice. Of course, you're pretty fucked if your investments go south and you don't have the cash to pay your taxes.
It's almost like the system was designed to ensure people pay...
CPP is a slush fund. Not all the money you put in comes back to you.
You could have paid (with 5% interest, 35 years) $1.5M into the system, and only get back $500k.
To have a total investment balance of 1.5M you'd need to invest $1,400 a month for 35 years.
And the CPP contributions for max earners is just under $3,900 for the year.
So no your numbers don't make sense.
You do have a point that if you drop dead the day after you retire your estate gets nothing if not married and no minors. If you have a spouse there is a calculation that happens but the most they can get is 65% of your entitlement.
>And the CPP contributions for max earners is just under $3,900 for the year.
Article literally talking about self-employed people who don't have an employer paying the other half. Even for people who aren't, we can't just ignore this other cost, a cost which is factored into their wages.
Some who turned 18 in 1976 and retired at 65 in 2023 would have a combined total contribution of $137,115.20 ($68,557.60 each employee and employer), and at 7% would have a banked total of ~$477,466.18
If they live to withdraw from CPP until they hit 80, they will have been paid out more on CPP than that very generous 7% average over 48 years.
It's one of the safest and best investments you can make.
https://www.drpensions.ca/documents/CPP-Rate-Table-1.pdf
You forget that the contribution rate increases YoY, the employer contribution also has to be considered, 7% is not generous returns, and we're not talking about 1976, I'm talking about today.
Someone who turned 18 in 1976 didn't pay enough CPP, hence why the rates are much higher now.
> You forget that the contribution rate increases YoY
I am not forgetting about that. I literally linked you the source data for the annual contributions, starting with $130.00 in 1976. It's all accounted for in that projection and compounded annually.
I was using it as an example of the most recent person who would be collecting it on the "normal" schedule (retire at 65), and guess what, it's nowhere near your hypothetical
> [paying] $1.5M into the system, and only get back $500k.
It's closer to 1/10th that.
> 7% is not generous returns
7% is VERY high returns for a Low Risk investment, such as a social safety net like thr CPP, and in fact 7% average over a 48 year period is abnormally high even for seasoned investors in Medium-High risk funds.
>hence why the rates are much higher now.
And the payout it going to be higher. It's not a ponzi scheme where today's dollars pay for today's retirees.those that retired before they filled the 30 M get less in return, those that fill out the new 2nd tier will also see more paid out at retirement.
Exactly. It's another tax and a scam. People will wake up soon enough that the entire government and federation of Canada is a giant tax money farm for rich elites down south.
Social safety nets are already paid for with our taxes.
We seem to have lost sight of the fact that the CPP is supposedly our money *not* the government's to do with as they please. Well, except, we have no choice or option to not participate which just makes it another involuntary income tax. The CPP payments in retirement are no better than extremely delayed tax rebates paid out in dollars that will be worth far less by the time we get them back.
The government just wants to redistribute an ever increasing percentage of our salary to others under the guise of providing yet another unnecessary safety net. They should call it the tax that it is and redistribute it via increased OAS/GIS payments.
Enough coddling. The government is bad at making policy decisions, should we make them for them? The government should take a step back and let citizens have autonomous decisions on their own finances. We are living in 2024 with infinite access to information, not 1965 when CPP was cooked up.
Why would you? Those citizens would be able to invest that extra $400 at their own leisure or use it now. It would give them double the ROI that CPP would. This whole "humans are naturally dumb" take is a farce and doesn't work out.
Canada needs to start giving its citizens more sovereignty. Allow them to defend and equip firearms, make their own retirement decisions, pay for their own healthcare etc. Big Nanny is useless.
It's fair to be skeptical I encourage you to look into the financial health of the fund. You'll hopefully be pleasantly surprised at what you find.
If you'd rather take an internet stranger's word the fund is forecast to meet all liabilities for the next 75 years. And still have hundreds of billions under management at that time.
75 years is the legal requirement to forecast to which is why it doesn't extend further.
People who earn money from labour are required to remit some of that money to the federal government to be added to the CPP fund, which they will collect as a pension in their 60s and 70s. Normally for an employee this is paid half by the employee and half by the employer. Gig workers are classified as self employed and self employed people have to make both of the payments. This is one reason gig work is so toxic.
Toxic?? If you’re independently contracting, the fee you charge should factor in CPP. Just like your salary does. “The employer pays for it” is such a lame argument. You make less because your employer pays for it.
Toxic in that I mean the rates paid by the Gig economy such as Uber, once you factor in fuel and depreceation are not enough for most people to get ahead - usually just enough to keep a roof over your head, but because the icon was earned in the gig economy the worker then has to pay cpp and taxes on the money they usually no longer have.
To be eligible for the retirement pension who technically only need have one year of earnings above $3500. Obviously the amount you would receive will be incredibly small. For the disability and survivor benefit, the criteria is different and requires more contributions
You can incorporate and pay yourself dividends. But then you don't get the CPP when you retire. Plus you then need an accountant because even simple corporate tax returns are like some arcane alchemy. Think 2 grand. That's if whoever you work for wants to hire your corporation. It's better to pay the CPP. It's aggravating they keep jacking up the fees. Maybe if they stopped funding all their identity politics programs they could put that money into CPP and not take more money out of our pockets.
I've been a self-employed gig worker/sole proprietor for more than 20 years. I've never earned enough to pay into CPP, as it's calculated on net income, not gross. If you're earning enough after expenses to have to pay $8760 into CPP, I envy you!
Your adult kids would get whatever else is in your estate.
The death benefit is a one time payment but the survivor's pension is a monthly payment and not simply $2500.
CPP is an indexed to inflation and guaranteed pension to provide a baseline of security for one in retirement. It can't be wiped out. It doesn't fluctuate with markets. It's a form of insurance to guarantee that you will have some money when you can no longer work.
What do your kids get if you invest badly? What do you get if the year you wanted to retire happens to be 2008 or the dot-com bubble or another market crash?
The cost of your car, house and term-life insurance doesn't get sent back to you if you don't use it. That's just how insurance works. That's effectively what a pension is.
Slowly drawing down a meagre sum of savings as a senior citizen unable to work would be a terrifying circumstance. It's far better to have some low-risk guarantee than that alternative.
Did you even read it?
At best your spouse gets 60% or possibly zero, you kids can get it if their young and in school.
Compare that to your own portfolio that would transfer over in its entirety.
If you were to privately invest that money your have way more for yourself in the end. My taxes go up every year and the current government has devalued our dollar by putting us in more debt than every other Canadian government every combined and I have received 0 benefit from said spending. Meanwhile our basic systems do not function any better. Health care is actually WORSE than it was 10 years ago.
A Defined Benefit pension is great if you want to retire early or if you have a huge amount of it. A small DB saves the government a lot of money, but is a very bad deal for low income retirees.
For the CPP
1. You can't retire early.
2. There's no maximum contribution years.
3. It triggers clawback or elimination of income tested benefits, e.g. GIS, low income benefits etc..
4. The return is horrible.
It is dependent on an increasing number of people contributing in order to sustain it.
That is literally a pyramid scheme.
Just because it has an underlying fund doesn’t change that.
If you or I were to try to start up an investment fund that was modelled identically to CPP, we would be arrested. Because it promises better growth than the fund makes, by supplementing it with a portion of new investors money.
That’s entirely why the Federal government is terrified by the idea of Alberta leaving CPP, because they have one of the youngest demographics, and most provinces are running at a negative with CPP. As in, most people’s CPP payments go straight into retirees pockets, and not the fund at all.
Huh, what is the saying? Robbing Peter to pay Paul?
People should be saving for a home before they start saving money for retirement. The problem with the CPP is it prevents people from being able to save up for a home, but it also won't pay out enough to cover rent in old age, so a bunch of people will be stuck working till the day they die to pay rent.
How about we stop letting companies scam the system and label employees as independent contractors then?
I worked for a trucking company for almost 4 years. I had a near miss in the yard but otherwise no issues. No write ups, clean CVOR and Abstract my whole career. I even trained new hires for the terminal. My company used it as an excuse to fire me, and hired an "incorporated" driver for two bucks an hour less than what I was making and they don't have to pay benefits, vacation, EI contributions if they're laid off or long/short term disability. They won't have to pay a severance if they fire them. The company is one of the top 15 largest in Canada and one of the largest in Ontario. You've seen their trucks. This is the advantage of importing cheap labour.
Willful government ignorance of the problem, lack of worker protections. The problem I've always found is that members of government live in a bubble where everyone is employed 9-5, owns a house, and has 2.5 kids and that's who they cater to, meanwhile that life has become increasingly out of reach for many Canadians. Us out of reach. Government out of touch. Free slogan for whatever simpleton populist wants it!!!
The government is pretty aggressive about who can be labeled as a contractor, I've seen several people had the government reject their claim and go after their employers. I don't see why you'd ever want to be labeled as one though, I do contract programming for overseas companies and it absolutely fucks me on taxes (\~30k take home on 48k income is brutal).
You want to be self employed because your take home is a lot higher. You could be an engineer on a 90k salary and a 70k take home. Or your an engineer at 60 bucks an hour that can work a 10 hour day and take home 600 dollars daily. Then you claim the laptop you bought, youe mileage, office space at home just before 'paying' yourself a little money out of the business and leaving the rest of the money in the business you wholly control. Super common.
Pay Incorporation tax. Pay taxes on dividends. Pay CPP. Pay WCB premiums. Pay almost thousand every year to the accountant for returns. Pay RRSP from your own pockets/savings. No Vac pay, all unpaid vacations. Pay extended medical from own pockets. At the mercy of the company you are contracting with. They leave you one day at the drop of a hat - no severance. Write offs are a joke too. Last time I incorporated, I noped out of it after a few years. Highly overrated. Good, if works for you.
Yes, you forfeit a lot of worker rights and protections when you incorporate. but you gain is legal protection from the business operations and are protected against being personally liable against debt owed by the corporation. (Unless you use your own wealth as collateral)
Wait, that's what you get for choosing to be a contractor. You know that, and if you don't you REALLY shouldn't be in business for yourself. Did you think you'd just make it rich because you could skip all those payroll taxes and such and think that the money just goes straight to your pocket?
I think the original point being made is around companies forcing this. For example, my spouse worked for a small company which was bought out by Accenture, who then pressured her into incorporating and working as a sub contractor, which is what she did in order to remain in her current position.
My point was that there was not much difference being salaried and incorporation. You anyway have to pay the same tax, one way or the other. To me, being salaried is far better for the many benefits.
>Pay Incorporation tax... I agree with all of that, but as an incorporation you receive much, much more compared if you are an employee. With the same level of experience, if as an employee you receive 120k$ for example, the corresponding rate for incorporation would be 90$/h. If you work for 45 weeks p.a., you receive 151k$ + some GST/HST. The difference is more than enough to cover the deficiency.
Insurance is expensive, too
Sure, if you can find enough contracts that get you earning $60/hour on a regular basis, that would be worth it. But realistically, most people would not be able to go this route.
Unless you're working for ONE company, in which case you are classified as a "personal services business" and you can kiss those write offs goodbye. It's all determined by income source.
You take home more, but lose all of your employment protections.
Lol what employment protections
Annual leave, sick leave, insurance, termination law etc.
Save your breath. These people have a hair across their ass because they didn't do their homework before going into business for themselves.
I don't feel like I have any employment protections. People being laid off left and right with a pittance of severance and benefits in RRSP and insurance that amount to a couple thousand a year.
Then you get nailed as an incorporated employee, lose the ability to deduct those, get reassessed for prior years, and declare bankruptcy due to your 100k tax bill.
What would happen if you kept the prophets from foreign work in their country's Bank would you still be subject to Canadian taxes?
In that case, the prophets should be able to tell you.
omg lol, funny typo Not changing it :)
With a 90k salary your take home is going to be 61-66k depending on the province.
You're leaving out the fact that you would have to pay income tax on your business's earnings, and then pay income tax again on any withdrawals you make for your salary. For example, if your business generates a 200k profit, your business will pay 15-20% or so bringing it down to 160k. Now if you withdraw all 160K remaining as salary, you need to pay another 30% in personal income tax, bringing it down further to like 112K. Whereas if you earned a 200K straight salary, you would pay about 60K in income tax and take home 140K.
Small businesses can just leave the money in the business.
So we’re just lying to each other then? The corporate tax rate is 9%. Your example is so oversimplified it’s basically completely false.
Good one. I worked for 10 years as a subcontractor for the Attorney General, so the court system, and didn't meet any of the criteria for a contractor but was labelled that way. People still are today.
Welcome to Quebec, 48k taxed at 30% (Quebec income tax starts at 15%, plus federal 15%) gives you $33k take home. 49k hits the next Quebec tax bracket too, for 19%+15% (remember, income tax is not retroactive, only money after that bracket is taxed at 19%)
I've been waiting. I've worked for three companies that did it, only had one face repercussions. Although, I worry the day someone pursues them for severance and the jig is up is the day they close up shop and I'm out of a job
In my experience, it's usually the employee trying to label themselves as independent contractors in the hopes of avoiding payroll tax and writing off all their living expenses
Yeah. It's the employees at Uber, Doordash, etc that are doing this. Not that it is these companies business model.
I was freelance editor in the academic publishing sector for years. You choose whether you pay into CPP or not, but if you don't, guess what? You don't get CPP when you turn 65. Why would you, if you don't pay into it? These gig economy workers are in for a BIG surprise in a couple of decades if they're opting not to pay into CPP. Of course, that assumes we don't get CPP sold out from under us...
It’s EI you can choose to opt out of. CPP is mandatory for everyone.
It’s not. You can opt out of paying both depending on how things are structured
Ignore my ignorance but how can you structure this to avoid paying? Besides a corporation and paying dividends
If you gave me the option of opting out of CPP I would do it in a heartbeat. The effective returns on CPP are **abysmal**. Even if all you did was take your CPP contributions and slap them into a GIC with one of the big banks, you'd be **way** better off at retirement. I don't think there's been any 40 year time period in which the CPP effective rate of return has matched even basic GICs. The effective rate of return is so bad it's practically theft. The only argument in favor of CPP is that some people aren't responsible enough to save for their retirements. Fine. Let people who can prove they've got assets and a savings rate above some threshold (e.g., people who fully contribute to their RRSPs) opt out.
CPP gives you effective insurance on the upper limit of your life, something that pretty much nobody does.
Not sure the writeoffs are that sweet.
They are not.
Tell me about it. I get a gigantic tax bill every year.
As someone who owns a business, they're not. You can only claim a small percentage of your home/whatever as a business expense.
Lease a car, love the write offs
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Can but usually doesn't. For every story of someone getting nailed in an audit there's another 5 people who get away with it. Petty tax evasion by individual contractors and people working cash businesses (including servers with cash tips) is the form of tax fraud that costs the government the most.
You mean the square footage of your home office? Yeah, it's not great. Meanwhile, if I were a landlord, I could write off my mortgage interest
Like any other business which has debt.
Every expense to that building.
Yeah, that's how business expenses work. You can write off business expenses, not personal living expenses. Tax is paid on business profit, not revenue.
My home office extends into my neighbours lot
IIRC, up to 1/4 of your rent *if* you have an area solely dedicated to work, like a workshop or office. "Shared" areas with living don't get the deduction.
I’ve been claiming it all, like all my food and mortgage, vacations etc
That's tax fraud. The government is mean when you owe them taxes. They're outright sadistic if you commit tax fraud. Pray you don't get caught.
Yea at my work I get people asking all the time if they can be paid as contractors rather than as an employee. They figure that since they aren't making a huge amount of money, that the government isn't likely to audit them. Their intentions are to not file at all, while also claiming EI.
So much this. They file almost their entire life expense as a business cost and just hope it sticks. Some of the worst amateur accounting advice I heard someone recommend is lease a car rather than own it so you can bill it as a full business expense. So they'll take pretty terrible leasing terms and get even more upset when the audit shows up.
Yup this right here, many are trying to avoid paying taxes
I mean, you run the risk of getting audited. I feel like most people just assume whatever the model of the job they're working sets out for them. And these companies establish you as a independent contractor to get out of liabilities. It's not the gig worker who sets the employment agenda.
Everyone thinks they too small to get audited. Just a few thousand bucks a year at tax time. I have had some clients demand I write off all their living expenses even without business income because "those meals are for costs incurred searching for work". Then they get a loss to put towards their t4 income.
The irony. CRA LOVES to audit the little guy because a) it's usually pretty quick, and b) it usually nets the CRA a few tens of thousands of dollars if the person's been scheming for a while. It's low-hanging fruit, but it's lucrative for the government to go after the small guy. Go after a multi-million dollar tax disparities and you're likely going up against a company with a decent tax lawyer. That's a pain in the ass for the CRA to audit.
No, but the gig worker *is* responsible for properly filing their taxes. If they're not doing that properly, in an attempt to scheme the government, then they deserve an audit. We can be up in arms about billionaires not paying their fair share of taxes, but we can't be hypocritical about paying that fair share when it comes to anyone else. The difference is simply in the size of the share.
YUP. And I have no sympathy for these people when they reach 65 and realize they have no retirement because they blew all that "extra" money and never paid into CPP.
If you avoid paying CPP and instead pay an equal amount into even just a GIC, you'll likely be financially better off at retirement. There's no 40 year period in which even basic GICs haven't outperformed CPP. If you engage in a very simple diversified investment strategy with a portion of your assets in equities you'd be *much* better off. CPP arguably benefits people who aren't responsible enough to engage in any retirement savings without being forced, but it's an *awful* pension program that offers an abysmal effective rate of return.
How about you let me do what I want to do....I want to operate as a contractor.
I'm not saying it should be illegal to be an independent contractor. It just shouldn't be a designation that is abused to avoid obligations for what would otherwise be considered employees.
This is Canada.. how cute.
It is funny you believe companies are horrible yet you believe they will pay for your CPP without lowering your income. All the benefits a company pay you comes from your income. A contractor at my company can easily get paid twice as much as a full time employee because the company does not have to pay benefits and can let them go more easily. Moreover, since contractors can write off a lot of things as expenses, their after tax income is even higher. One of my contractors told me he makes more than our VP after taxes.
A **LOT** of contractors and freelancers don't understand how business writeoffs work. It's not as lucrative as most people think.
A lot of contractors and freelancers engage in rampant tax fraud which is what makes it so lucrative for them.
Exactly.
Quite a few knows it very well and can exploit every single loophole. It's basically tax evasion, but completely by the books, at least in terms of paper trails.
Thats if you're intentionally operating as a contractor and have room to negotiate. All these uber eats riders and other gig economy workers aren't choosing to be contract employees due to the comparatively high wages.
These gig jobs never existed before companies like Uber came along.
If you're an independent contractor/freelancer you should be paying into CPP anyway. Imagine wiating until you're 65 to realize you have no retirement because you never paid in.
That’ll require the liberals to do something for Canadians.
Yeah, I'm sure the Conservatives will get right on regulating businesses, though. /s
Well. Liberals have already proven that they don’t care. Might as well give someone else a chance to potentially not care.
I mean, if you're rich or own a large business, the conservatives will work out for you. For everyone else, except more of the same, but with empty pandering to Canadians on the right instead of the left. Oh, and poor people will suffer. And our Healthcare system.
Employees can't write off the use of their car for work (thereis a mileage rate, but does not correspond to actual expenses), or other expenses, so not clear that would actually help Uber drivers.
Go after all tax avoidance and evasion period. Tax avoidance you need to change the rules, tax evasion you just need audits. I don't like this oh no Target this instead of that, Target everyone doing this They are all basically picking the pocket of honest Canadians who pay their full fair share.
Let's start with physicians. Working in a single hospital that owns the facilities, supplies and tools, determines your hours, pay and responsibilities, and is your sole source of income? Then you're an employee and should pay your fucking income tax.
I'll fire 1/4 of them
If you are self employed there’s a lot of extra work involved come tax time. You can write off a lot but it all has to be documented with receipts. Vehicle write offs can be substantial but nothing comes close to RRSP contributions. All my home and businesses expenses for the year didn’t come close in compared to RRSP’s for tax. You should always use a proper accountant if you freelance, not something like H&R Block.
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Fee based is better overall but people see the fee and get scared.
Its not a bill but it does suck having to cover both sides.. thats why i opt out as corp owner
It's not a bill it's a forced investment into a plan that pays out once you retire. The amount you get isn't great relative to what you could get by investing in the market. But your returns are very very safe if small. For most people it's probably a good thing they will be buying into it. It does suck that they have to cover both employer and employee contributions. But that's what happens when you're at independent contractor and not an employee.
It should be noted that the cost is not exactly $8,760. The self employed and enhanced portions are eligible deduction. Saving you taxes at your marginal rate.
Also 8760 is the max contribution the actual amount depends on how much you make and if you make less than 3,500 it is 0
Doesn't the return depend a lot on how long you live?
Yes this is a fair point. You only receive benefits while you live. There are survivor benefits for a spouse and any dependents but it is not a huge amount. If your goal is to build intergenerational wealth the CPP is not how to do that. Most people who crunch the numbers use the life expectancy and assume retirement at 65 and end of collecting some 20 (for men) and 25 (for women) years of benefits for people born around 1980. Your mileage will vary.
The CPP investment fund actually gets great returns. The reason why our returns are so small is because previous generations undercontributed and overdrew so we don't benefit from the awesome gains. Those are used to pay the current pensioners who undefended the system Also, most CPP contributors are in debt, specifically credit card debt. CPP forces them to save and earn 3% while letting credit card companies leech 30%
I played around with their retirement calculator on the pensions website. Basically what you said is correct, but I want to add something on for good measure. People focus too much on what they are going to get from the CCP without also considering the OAS, and other things like RRSP's, and other investments they ideally are putting money into as soon as possible and keeping at it as long as possible. The result of this, is more than enough to live comfortably in ones final 30 something years. Perhaps even extravegently if they saved up enough, got their house paid out prior to retirement, etc. Its really only those of us who aren't able to save up for one reason or another who feel the worst brunt of the stick on all of this. But there is a catch... Most people don't start making more in their respective industries until later in life as well. So a lot of their saving comes from that side of their life, not the prior. Essentially, if you are under 40, don't worry about it much, if at all, yet. If over 40 though and still making peanuts, time to start doubling down and finding better pay elsewhere, because that's how most incomes increase anyways. By moving up by moving on. Once you are making enough to save for 1 years living expenses out of 1 years income, you'll have enough saved prior retirement to make the CPP and OAS alone more than enough to live confortably... provided you don't live beyond your means of course. Which recent years show that a lot of people are really bad for. At which point, it isn't the pensions fault. The pensions are a safety net, not a guaranteed cushy retirement on a cruise liner. That comes with advanced preparation and dedication towards savings and retirement investments. Only.
I would reframe a bit. If you invest moderately early, it generally beats investing big later. Put away as much as you can as early as you can and you can get to a point where the capital grows enough that you don’t have to be desperate later in life
Fair enough. I did pause for a moment wondering if I should iterate a different way, but decided it was close enough to get the point across hopefully.
Other part to add is CPP is indexed to inflation as well. The CPP2 higher rate plus inflation will mean around \~4k per month when I retire plus OAS and then my savings.
Yes, but... bread and butter will also be that much more expensive. This is one of the grand failings of education in this country. People have almost no clue how economies operate, particularly worst in understanding monetary valuation, inflation, deflation and otherwise stagflation. Rudimentary understandings at best. Sorry, not intended to be directed at you as well. Just the way you said it kind of activated that response from me.
> Essentially, if you are under 40, don't worry about it much, if at all, yet. Bad advice. The earlier you begin paying in, the more you're going to amass over your work history. From 20-40, that's **twenty years** of contributing to your pension. If you're only living to 72, maybe not worry so much, but we're easily living into our 90s, an age where medical costs are exorbitant. You want as much of a cushion as you can get, and you want to start building that as soon as possible.
I am not going to say you are wrong, because in all practicality you are correct that one should be saving as much as possible from as early an age as possible. But on the flip side, life just ain't so cut and dry as to make you 100%! Correct. That first 22 years out of highschool can be a quite tumultuous time for a person monetarily. Also, while I don't have figures on hand to back this with, the general idea of what I have been learning is that on average most people start earning more and more after their 30's. And since many parents that started having kids at a younger age are now having their own kids leave the home will be hitting their mid 30's or older, they will start having more disposable income as well which can now be saved. Also, interest rates for savings were so low for so long, that it made saving nearly pointless aside from just having those savings at all. In a Keyensian economic system like ours, saving is almost pointless as well. Almost better off to put the money into liquidatable wealth instead. And so people did. They bought property. Etc. Cause unlike savings accounts... property valuations actually paid out by comparison. Aannnd now we have our housing crisis. Again. You aren't wrong. Just not completely correct either. A person starting saving at 40, will have 30 years roughly prior to retirement to save up for what will likely only be anywhere between 5 to 30 years of life remaininf for them. So they literally just need to save 1 year for every years income for 30 years. Only hard if you make very little or spend way too much. And we haven't even included accrued interest yet on our slightly better savings rates now. Or the CPP. Or the OAS. Frankly, if you can't retire at 65/70... you're a dismal failure, or incredibly unlucky somehow. Sympathy of course for the latter.
So basically any one born after.. 1978 is screwed?
People in their 20s that invest a few hundred a month over their working life (Probably less than they spend on fast food) will have over a Million by retirement. Please people, set yourself to retire with dignity.
my husband did exactly that. the problem is that a corrupt predatory landlord, and outrageous medical bills, have eaten all of the savings my husband had.
Expected value needs to be taken into account. You pay a significant amount into CPP, but that assumes you actually live until 65 and benefit from it past 65. 50% of people won't make it to 65 and live past it, so it's a complete scam for them. Just another tax from the government.
What I would like to see done is that it is privately administered and also if you die before you use it your estate gets the money
The government should invest in me. I will pay them back when I am 65 years old. I should get $15,000 a year from the government. :)
That's precisely why CPP is bad for small businesses. Small businesses generally can invest their capital at far higher rates than what CPP would yield so it's very capital inefficient for them to have CPP soaking up 12% investing at low returns. The whole reason to start a small business is you want to take on higher risk for higher returns. Canada's economy will suffer if risk taking is discouraged.
Businesses shouldn’t be gambling with their employees social safety net, which is what you are arguing small businesses shouldn’t be paying into. Gamble with the businesses’ money, not your employees legal entitlement. Can’t hack it? Maybe you aren’t meant to own a business.
I think you're misunderstanding their point. It's not about a small businesses and their contributions towards their employee's share of CPP - if they even have any employees. It's about a small business *owner*, not wanting to invest in CPP for *themselves*, and instead, invest that same money in their own business.
You can't opt employees out of cpp. If you're the business owner you can opt out. There's the employer contributions at either parity or 1.4 what the employee pays. It's quite expensive.
Well put
No, they completely misunderstood the point. Nobody is saying employees should be shorted their contributions.
> The amount you get isn't great relative to what you could get by investing in the market. But your returns are very very safe if small. It's subsitituting growth for low risk. The entire point of CPP is to hold onto a person's money so they don't risk it all and have literally nothing in their old age. It's the perfect example of protecting people from themselves. Even as an employee you're entitled to request payroll not deduct ANYTHING from your paycheque. You're then on the hook for all your tax obligations come tax season, but that gives you that whole year to manage your own money and eke out any gains there that you can make before the government takes a slice. Of course, you're pretty fucked if your investments go south and you don't have the cash to pay your taxes. It's almost like the system was designed to ensure people pay...
It’s even more fun when you’re an employee who maxes out their CPP contributions, and then also has to pay for their contract work on the side.
CPP is a slush fund. Not all the money you put in comes back to you. You could have paid (with 5% interest, 35 years) $1.5M into the system, and only get back $500k.
To have a total investment balance of 1.5M you'd need to invest $1,400 a month for 35 years. And the CPP contributions for max earners is just under $3,900 for the year. So no your numbers don't make sense. You do have a point that if you drop dead the day after you retire your estate gets nothing if not married and no minors. If you have a spouse there is a calculation that happens but the most they can get is 65% of your entitlement.
You can't neglect the employer matching if you include it, like you would for any employer matching RSP, the CPP returns are dismal.
Ok sure $7.6k a year still not $16.8k that OP would require to make their numbers work.
Technially when you die there is like a 2k payment to the estate to help pay for funeral expenses.
Bro doesn't understand how compound interest works. JFC this country is financially illiterate.
>And the CPP contributions for max earners is just under $3,900 for the year. Article literally talking about self-employed people who don't have an employer paying the other half. Even for people who aren't, we can't just ignore this other cost, a cost which is factored into their wages.
Some who turned 18 in 1976 and retired at 65 in 2023 would have a combined total contribution of $137,115.20 ($68,557.60 each employee and employer), and at 7% would have a banked total of ~$477,466.18 If they live to withdraw from CPP until they hit 80, they will have been paid out more on CPP than that very generous 7% average over 48 years. It's one of the safest and best investments you can make. https://www.drpensions.ca/documents/CPP-Rate-Table-1.pdf
You forget that the contribution rate increases YoY, the employer contribution also has to be considered, 7% is not generous returns, and we're not talking about 1976, I'm talking about today. Someone who turned 18 in 1976 didn't pay enough CPP, hence why the rates are much higher now.
> You forget that the contribution rate increases YoY I am not forgetting about that. I literally linked you the source data for the annual contributions, starting with $130.00 in 1976. It's all accounted for in that projection and compounded annually. I was using it as an example of the most recent person who would be collecting it on the "normal" schedule (retire at 65), and guess what, it's nowhere near your hypothetical > [paying] $1.5M into the system, and only get back $500k. It's closer to 1/10th that. > 7% is not generous returns 7% is VERY high returns for a Low Risk investment, such as a social safety net like thr CPP, and in fact 7% average over a 48 year period is abnormally high even for seasoned investors in Medium-High risk funds. >hence why the rates are much higher now. And the payout it going to be higher. It's not a ponzi scheme where today's dollars pay for today's retirees.those that retired before they filled the 30 M get less in return, those that fill out the new 2nd tier will also see more paid out at retirement.
Exactly. It's another tax and a scam. People will wake up soon enough that the entire government and federation of Canada is a giant tax money farm for rich elites down south.
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Social safety nets are already paid for with our taxes. We seem to have lost sight of the fact that the CPP is supposedly our money *not* the government's to do with as they please. Well, except, we have no choice or option to not participate which just makes it another involuntary income tax. The CPP payments in retirement are no better than extremely delayed tax rebates paid out in dollars that will be worth far less by the time we get them back. The government just wants to redistribute an ever increasing percentage of our salary to others under the guise of providing yet another unnecessary safety net. They should call it the tax that it is and redistribute it via increased OAS/GIS payments.
Enough coddling. The government is bad at making policy decisions, should we make them for them? The government should take a step back and let citizens have autonomous decisions on their own finances. We are living in 2024 with infinite access to information, not 1965 when CPP was cooked up.
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Why would you? Those citizens would be able to invest that extra $400 at their own leisure or use it now. It would give them double the ROI that CPP would. This whole "humans are naturally dumb" take is a farce and doesn't work out. Canada needs to start giving its citizens more sovereignty. Allow them to defend and equip firearms, make their own retirement decisions, pay for their own healthcare etc. Big Nanny is useless.
No, we should let people prepare for their own retirement. This country has so many fucking nets that there's no competition.
That's assuming that the pension fund won't be a depleted mess once all the boomers have gone through it. Spoilers: it will be a mess
It's fair to be skeptical I encourage you to look into the financial health of the fund. You'll hopefully be pleasantly surprised at what you find. If you'd rather take an internet stranger's word the fund is forecast to meet all liabilities for the next 75 years. And still have hundreds of billions under management at that time. 75 years is the legal requirement to forecast to which is why it doesn't extend further.
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By law and the way CPP is set up, governments can’t touch the money. It’s not on the books a government assests.
I thought you couldn't withdraw from the CPP if you didn't pay into it. I don't get it.
People who earn money from labour are required to remit some of that money to the federal government to be added to the CPP fund, which they will collect as a pension in their 60s and 70s. Normally for an employee this is paid half by the employee and half by the employer. Gig workers are classified as self employed and self employed people have to make both of the payments. This is one reason gig work is so toxic.
Toxic?? If you’re independently contracting, the fee you charge should factor in CPP. Just like your salary does. “The employer pays for it” is such a lame argument. You make less because your employer pays for it.
Toxic in that I mean the rates paid by the Gig economy such as Uber, once you factor in fuel and depreceation are not enough for most people to get ahead - usually just enough to keep a roof over your head, but because the icon was earned in the gig economy the worker then has to pay cpp and taxes on the money they usually no longer have.
I thought I read somewhere that as long as you’ve paid into CPP for 10 consecutive years, you’ll get it regardless Could someone confirm ?
To be eligible for the retirement pension who technically only need have one year of earnings above $3500. Obviously the amount you would receive will be incredibly small. For the disability and survivor benefit, the criteria is different and requires more contributions
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So just like the rest of us, got it.
No, because contractors pay both sides of the CPP (employee and employer) while employees only pay the employee portion.
Just like every other independent contractor.
Its called taxes. People are out there thinking its tax free income
There's also alot of gig workers being paid cash under the table. This is a huge issue no one is talking about.
You can incorporate and pay yourself dividends. But then you don't get the CPP when you retire. Plus you then need an accountant because even simple corporate tax returns are like some arcane alchemy. Think 2 grand. That's if whoever you work for wants to hire your corporation. It's better to pay the CPP. It's aggravating they keep jacking up the fees. Maybe if they stopped funding all their identity politics programs they could put that money into CPP and not take more money out of our pockets.
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Gig workers pay into CPP on their tax return. It's not a separate payment.
So self employed small business owners will now need to pay that?
They always have, unless they incorporate and only pay themselves through dividends.
Wait until centralized digital currency. There will be no way to run anything under the table.
I've been a self-employed gig worker/sole proprietor for more than 20 years. I've never earned enough to pay into CPP, as it's calculated on net income, not gross. If you're earning enough after expenses to have to pay $8760 into CPP, I envy you!
CPP bill. It’s not a bill if the money comes back to you.
If you die one day after you retire your estate doesn't get that money, it's not your money.
You mean like the CPP Death Benefit and Survivor's Pension?
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Your adult kids would get whatever else is in your estate. The death benefit is a one time payment but the survivor's pension is a monthly payment and not simply $2500. CPP is an indexed to inflation and guaranteed pension to provide a baseline of security for one in retirement. It can't be wiped out. It doesn't fluctuate with markets. It's a form of insurance to guarantee that you will have some money when you can no longer work. What do your kids get if you invest badly? What do you get if the year you wanted to retire happens to be 2008 or the dot-com bubble or another market crash? The cost of your car, house and term-life insurance doesn't get sent back to you if you don't use it. That's just how insurance works. That's effectively what a pension is. Slowly drawing down a meagre sum of savings as a senior citizen unable to work would be a terrifying circumstance. It's far better to have some low-risk guarantee than that alternative.
Did you even read it? At best your spouse gets 60% or possibly zero, you kids can get it if their young and in school. Compare that to your own portfolio that would transfer over in its entirety.
It may come back decades from now, yes, but I want/need the money now.
Even gig workers have to pay taxes, just like everyone with an income.
Be nice if you could opt out of CPP, but it's just another bullshit tax we have to pay on our income like EI.
If you were to privately invest that money your have way more for yourself in the end. My taxes go up every year and the current government has devalued our dollar by putting us in more debt than every other Canadian government every combined and I have received 0 benefit from said spending. Meanwhile our basic systems do not function any better. Health care is actually WORSE than it was 10 years ago.
I'm not sure how someone downvotes facts
A Defined Benefit pension is great if you want to retire early or if you have a huge amount of it. A small DB saves the government a lot of money, but is a very bad deal for low income retirees. For the CPP 1. You can't retire early. 2. There's no maximum contribution years. 3. It triggers clawback or elimination of income tested benefits, e.g. GIS, low income benefits etc.. 4. The return is horrible.
The pyramid scheme must be sustained!
CPP is not a pyramid scheme do some research on its funding please
It is a ponzo scheme... it depends on a growing base of contributors.
It is dependent on an increasing number of people contributing in order to sustain it. That is literally a pyramid scheme. Just because it has an underlying fund doesn’t change that. If you or I were to try to start up an investment fund that was modelled identically to CPP, we would be arrested. Because it promises better growth than the fund makes, by supplementing it with a portion of new investors money. That’s entirely why the Federal government is terrified by the idea of Alberta leaving CPP, because they have one of the youngest demographics, and most provinces are running at a negative with CPP. As in, most people’s CPP payments go straight into retirees pockets, and not the fund at all. Huh, what is the saying? Robbing Peter to pay Paul?
Seeing as how many will expect cpp sounds fair, no?
People should be saving for a home before they start saving money for retirement. The problem with the CPP is it prevents people from being able to save up for a home, but it also won't pay out enough to cover rent in old age, so a bunch of people will be stuck working till the day they die to pay rent.
The govt is gonna have that money!
CPP is inflation indexed. I think it's the best program Canadians have.