T4 Box 26 - CPP/QPP Pensionable Earnings

Starting in January 2012 (for the 2011 tax year), box 26 must always be completed. In most cases, boxes 14 and 26 should be the same amount. You have to complete the box in all situations, up to the maximum pensionable earnings for the year.

If there are no pensionable earnings, enter “0” in box 26. For exempt employment, enter “0” and see box 28.

CPP – The following types of remuneration are included in box 14, “Employment income”, but are not included in box 26, “CPP/QPP pensionable earnings”:

  1. Remuneration paid to the employee:
  • before and during the month the employee turned 18. You should have started calculating the CPP contributions and pensionable earnings effective the first pay dated on or after the first of the month following the employee’s 18th birthday;
  • after the month the employee turned 70. You should have stopped calculating the CPP contributions and pensionable earnings after the last pay date in the month of the employee’s 70th birthday;
  • during the months the employee was considered to be disabled under the CPP or QPP; or

Note
After January 1, 2012, if the employee is at least 65 years of age but under 70, is receiving a CPP or QPP retirement pension, and has elected to stop contributing to the CPP, you should calculate the CPP contributions and pensionable earnings based on the number of months before and including the month the employee elected to stop contributing to the CPP.

  1. Remuneration paid to the employee while the employee worked in “excluded employment” (defined in Chapter 2 of Guide T4001, Employers’ Guide – Payroll Deductions and Remittances).
  1. amounts for a clergy member’s residence from which you did not deduct CPP contributions (if the clergy member gets a tax deduction for the residence, do not deduct CPP contributions).
  2. Any excluded income, benefits, or payments as described in Chapter 2 of Guide T4001, Employers’ Guide – Payroll Deductions and Remittances.
  3. Amounts for non-taxable Indian employees for whom you elected to pay CPP.

Subtract any of the amounts noted above from the amount in box 14, and enter the difference in box 26. Do not change the amount in box 14.

Note
Taxable benefits only (not including security option benefits) – If you provide pensionable taxable benefits (non-cash) and no other remuneration is paid in a tax year (for example, an employee is on an unpaid leave of absence and the employer continues to provide benefits during the leave), enter “0” in box 26. For security option benefits, report the amount of the benefit in box 26 at all times. Do not code the slip CPP-exempt in box 28, since the employee may want to elect to pay CPP on the amount.

If the earnings are indicated as CPP/QPP exempt in box 28, box 26 will default to zero.

QPP

Regardless of the employee’s province or territory of residence, complete box 26 when the employee is subject to QPP. If the maximum QPP pensionable earnings for the year have been reached on the RL-1 for the employee, but the income in box 14 of the T4 slip is less than the maximum pensionable amount, enter the maximum pensionable earnings amount in box 26.

Also override the amount calculated in box 26 of the T4 slip and in box G of the RL-1 slip when the employee’s total remuneration (entered in box 14 of the T4 slip and in box A of the RL-1 slip) includes non-pensionable earnings, such as:

  • remuneration paid to the employee:
  • before and during the month the employee turned 18;
  • during the months the employee was considered to be disabled under the CPP or QPP rules; or
  • after the month the employee died.
  • remuneration paid to the employee while he or she was engaged in an excepted employment.

Subtract any of the above amounts from the employee’s total employment income and enter the result in box 26 of the T4 slip and box G of the RL-1 slip (note: an override on box 26 is posted to box G). Do not modify the amount entered in box 14 of the T4 slip or box A of the RL-1 slip.

In addition, enter the number of weeks of employment eligible for the QPP contribution in the appropriate box, in order for the contribution to be calculated correctly. For more information, consult the Box 16/17 - CPP/QPP Contributions help topic.

Note: According to QPP rules, a proration is not performed in the case of an employee who turn 70 or who begin to receive retirement benefits during the year, contrary to the rules applicable for CPP purposes.