Question

How do you calculate CPP for employee paid by commission only?

Answer 1

To calculate CPP for an employee paid by commission, subtract the basic exemption from the commission income and apply the CPP contribution rate to the remainder. It is split between employer and employee. The provided information about Jason's salary cut does not directly relate to CPP calculations.

Step-by-step explanation:

To calculate CPP (Canada Pension Plan) contributions for an employee who is paid by commission only, you need to follow a specific process. This involves determining the employee's commission income for the pay period and then applying the current CPP contribution rates to that amount. Note that this method is general and may vary by jurisdiction or over time due to changes in legislation or contribution rates.

Here's how you could calculate it:

1. Determine the amount of commission earned by the employee during the pay period.
2. Subtract the basic exemption amount for the pay period from the commission income. The basic exemption amount is set by the government and is the amount of income that is exempt from CPP contributions.
3. Apply the current CPP contribution rate to the remainder to determine the amount of CPP that needs to be contributed. This rate is split between the employer and the employee.

In your given information about Jason, mentions a reduction in government income affecting his net income, but it doesn't directly relate to the CPP contribution calculations for commission-based income. If Jason's salary is reduced by one-half, this might impact his CPP contributions only in the sense that his commission income for CPP calculations would be lower.