CCP deductions for employee turning 18 during tax year

Question

Can someone confirm how CPP should be calculated for an employee who turns 18 during a given year?  SAP appears to calculate Number of accountable months / 12, for example and employee turns 18 in June so Mamimum contribution for the year is reduced by a factor of .5 (50%).  CRA is telling our payroll department the calculation should reduce the Annual basic exemption before doing the calculation, not the Maximum contribution.

Answer 1

Hello,
Even Annual Basic also it is taking only 50% if the employee is turing 18 in June. I have done simulation run for test employee
Partial Pay Period:... 07/01/2011 - 07/31/2011
Calculation of CPP contribution
Annual basic exemption ......................           3500.000 CAD
Number of pay periods within the year .......  /          12.000
Basic exemption for the pay period ..........            291.667 CAD
Pensionable earnings for the pay period .....           3443.180 CAD
Basic exemption for the pay period ..........  -         291.667 CAD
Base for calculation ........................           3151.513 CAD
CPP/QPP contribution rate ...................  *           0.050
CPP/QPP contribution before limit check .....            156.000 CAD
CPP/QPP contribution, YTD ...................  +           0.000 CAD
............................................            156.000 CAD
Maximum CPP/QPP contribution for the year ...           2217.600 CAD
Maximum contribution for the year ...........           2217.600 CAD
Number of accountable months / 12 ...........  *           0.500
Maximum contribution after pro-ratio ........           1108.800 CAD
CPP/QPP contribution for the pay period .....            156.000 CAD
Basic exemption for month is 291.667 start from July, So for remaining 6 months basic exemption employee gets is 6*291.667 = 1750 which is 50% of Annual Basic Exemption. System is calculating correctly as per CRA requirement. Kindly check in your system.
With Regards,
S.Karthik