First Nations Workers and the Canada Pension Plan (CPP)
Catalogue Number ISPB 314-08-02E
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- Can I contribute to the CPP if my income is not taxable?
- What if my employer doesn't participate in the CPP?
- Will paying into the CPP affect the tax exemption on my earnings?
- What if I am self-employed in a First Nations community?
- How can I get information from CCRA?
- Do I need a social insurance number? How do I get one?
- Can I get CPP coverage anywhere in Canada?
- How much do I have to contribute?
- What if I work both on and off reserve during the year or if my work is seasonal?
The Canada Pension Plan (CPP) is a public pension plan designed to provide workers in Canada and their dependants with some financial protection from loss of income under certain circumstances. As long as you meet the eligibility requirements, the CPP will be there for you and your family when you retire or if you become disabled and cannot work. First Nations workers employed off reserve have had to contribute to the CPP since 1966, but it is only since 1988 that First Nations employers and workers employed on reserve can choose to contribute.
Can I contribute to the CPP if my income is not taxable?
Yes. Employers on reserves are allowed to choose whether to have CPP coverage for their First Nations employees, even though those employees do not pay taxes on their income. Employers must have a written agreement with Canada Customs and Revenue Agency (CCRA - formerly Revenue Canada) to collect CPP contributions. If your employer chooses to participate in the CPP, you must participate as well by making contributions.
What if my employer doesn't participate in the CPP?
If your employer chooses not to participate, you can choose to contribute on your own, by filing an income tax return along with the correct forms (CPT-20 - "Election to Pay CPP Contributions" and Schedule 8 - "CPP Contributions on Self-Employment and Other Earnings"). You can get these forms from CCRA by calling the number listed later in this fact sheet.
The amount you can receive in benefits depends on how long and how much you contribute to the CPP. If you are older, perhaps in your fifties, and have not made very many contributions to the CPP, your benefits will be lower than those of someone else the same age who has contributed more or for a longer time. Ask a financial advisor what options you have for disability, retirement and survivor benefits under other plans, and compare this to the cost of CPP contributions.
Will paying into the CPP affect the tax exemption on my earnings?
No. Your tax status is not determined, or affected, by whether or not you contribute to the Canada Pension Plan.
What if I am self-employed in a First Nations community?
If you are a self-employed First Nations person and your business is exempt from income tax, you can still choose to contribute to the CPP as long as you earn at least $3,500 a year. You will have to file an income tax return every year along with the correct forms (CPT-20 - "Election to Pay CPP Contributions" and Schedule 8 - "CPP Contributions on Self-Employment and Other Earnings"), available from CCRA.
How can I get information from CCRA?
Contact CCRA free of charge at: 1 (800) 959-8281.
Do I need a social insurance number? How do I get one?
Yes, you will need a social insurance number (SIN). For more information visit the HRDC Web site: or call toll-free 1 800 206-7218.
Can I get CPP coverage anywhere in Canada?
The CPP is available in all parts of Canada, except in the province of Quebec, which has its own similar program, the Quebec Pension Plan, or QPP. The QPP does not allow tax-exempt persons to contribute to the plan. If you work in Quebec, ask your employer whether there is a private pension plan to which you can contribute.
How much do I have to contribute?
If you earn more than $3,500 in a year, you pay a percentage of the money earned, up to a maximum amount (see chart). For 2002, the maximum amount on which you can pay contributions is $39,100. You and your employer each pay half of your CPP contributions. If you wish to participate and your employer chooses not to or you are self-employed, you must pay both halves.
What if I work both on and off reserve during the year or if my work is seasonal?
Your contributions are based on your earnings during the year. Off reserve, employers must deduct CPP contributions from your earnings. Employers on reserve can choose whether to contribute to the CPP. If your employer decides not to and you wish to contribute, you must report all earnings and CPP contributions from all employers for that year when you file your income tax return. If you pay too much in CPP contributions, you will receive a refund.
