How much CPP do I have to pay as a self-employed person in Canada?

When you are self-employed, you pay CPP contributions on your net business income above the annual basic exemption amount. Unlike employees who split the contribution with their employer, self-employed individuals pay both the employee and employer rates combined — roughly double what an employee at the same income level would remit.

The contribution rates and the maximum pensionable earnings ceiling are set federally and adjusted annually by the CRA. Because the combined rate is higher than most self-employed people expect, it is common to underestimate the amount owing at tax time and face an unexpected balance due in April.

One strategy is to set aside an estimated amount each month into a separate savings or tax account. You can also make quarterly tax instalments if the CRA has notified you that instalments are required. On the positive side, CPP contributions made on self-employment income build your future CPP retirement benefit, just as they would in employment. Speak with a tax professional to estimate your CPP obligations before year end.