$3500 is a Basic Exemption Amount (BEA) applied to CPP distributed by CRA to lessen the financial burden on low-income workers. The article gives an overview of how the BEA amount relates to CPP and what it means.
What is $3500 BEA?
The 3500 Basic Exemption Amount is the CPP threshold under which no person earning less than this amount contributes to the CPP annually. It is a relief given to low-income earners since they contribute more than the wages they are earning. Payments to the CPP are only made for any amount more than 3500 becomes “pensionable earnings” and thus on which CPP payments have to be paid.
For instance, a $20,000 earner pays CPP premiums on only $16,500 of the earnings, which is $20,000− $16,500 – 3,500.
BEA-CPP Eligibility
The eligibility of BEA are:
Self-Employed: Employees who are self-employed are responsible by themselves for the CPP contribution. A deduction of $3500 means that reducing the income amount which is used for calculating BEA amount.
Workers and Employers: The workers and employees both are eligible to pay half of this contribution amount to CPP. It reduces the amount by $3500 when calculated. BEA lessen the burden by reducing the share of amount they have to pay. Old People above 60 years are eligible to get CPP.
Payment Schedule: The amount of BEA has never been even in the time of inflation. The CPP Payment has been scheduled to 27 November 2024 on Wednesday. This $3500 BEA is not a cash benefit whereas CPP is amount paid to all pensionholders.
Conclusion of BEA $3500 in CPP
The BEA amount under the CPP scheme is beneficial for both employers and the workers. This by excluding them from the first pay of $3500 annual amount of CPP. It means that the earnings above $3500 are considered for calculations. However, since 1996 the BEA amount has never changed, even in the time of inflation. This does not effect the calculation on the benefits of CPP. There is no required to contribute for the people earning less than $3500. To see more details, visit: My Service Canada
