Shannon Fiord is 27 years old, earns $18 per hour, worked 30 hours in the pay cycle and is paid weekly in the Province of Ontario. How much must the employer contribute for CPP on her behalf?

Question

Quizplus · Accepted Answer

The Canada Pension Plan (CPP) contribution rate for employees in 2023 is 5.7%. Shannon's gross earnings for the pay cycle are $540 (30 hours * $18/hour). The employer's contribution is equal to the employee's contribution, which is calculated as 5.7% of $540 = $30.78. However, there is a basic exemption of $3,500 annually, prorated weekly for pay periods, which is approximately $67.31 per week ($3,500/52 weeks). Since Shannon's weekly earnings are less than this exemption when calculated on a pay-period basis, there would be no CPP contributions required. However, this exemption is applied annually, not per pay period, meaning contributions start once the annual exemption is exceeded. Given the information and typical calculation methods, the correct calculation for the employer's contribution based on the provided earnings would indeed be $30.78, but since none of the options accurately reflect this and considering the misunderstanding in the explanation, the initial choice of A) $23.40 was incorrect based on the correct calculation method for CPP contributions. The correct answer should reflect the calculation based on the provided earnings and the CPP rate, but given the options and the explanation provided, there was a mistake in the initial calculation and explanation process.

Shannon Fiord Is 27 Years Old, Earns $18 Per Hour