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At this point, the YMPE is projected to rise to about $72,543 by 2025, with the result that the second tier of contributions will apply to earnings between $72,543 and $82,700. Both these amounts will then increase over time as the YMPE is adjusted to match increases in Canada’s average industrial wage. The second tier of contributions will be fully deductible for employees, rather than producing a non-refundable tax credit like basic CPP contributions up to the YMPE.
Changes to the Income Tax Act have already been introduced to permit the deduction of the second tier of contributions. Legislation to implement the remaining changes was introduced on October 6, 2016. At this point, it appears there will be no opt-out on second tier contributions for employers already providing an equivalent retirement benefit.