CPP for the self-employed: what you pay and where it goes
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A self-employed person pays both the employee and employer halves of CPP, and pays it on the tax return, not through payroll.
Short answer: for 2026 a self-employed person pays 11.9% on net business income between CAD 3,500 and CAD 74,600, which is the employee and employer shares of 5.95% each, to a maximum of CAD 8,460.90. A second contribution of 8% applies to earnings between CAD 74,600 and CAD 85,000, to a maximum of CAD 832.00. It is paid when the T1 return is filed, using Schedule 8.
What are the 2026 numbers?
| Self-employed 2026 | |
|---|---|
| Basic exemption | CAD 3,500 |
| Earnings ceiling for the first contribution | CAD 74,600 |
| Rate on earnings from CAD 3,500 to CAD 74,600 | 11.9% (two shares of 5.95%) |
| Maximum first contribution | CAD 8,460.90 |
| Second contribution | 8% on earnings from CAD 74,600 to CAD 85,000 |
| Maximum second contribution | CAD 832.00 |
An illustration with made-up numbers: a sole proprietor with CAD 60,000 of net business income pays 11.9% on CAD 56,500 (CAD 60,000 less the CAD 3,500 exemption), which is CAD 6,723.50. No second contribution applies, because the income is under CAD 74,600.
Where is it paid?
Self-employed people do not pay CPP through payroll. The contribution is worked out on Schedule 8 of the T1 income tax and benefit return, on net business income after expenses, and paid with the balance owing. Investment income and rental income are not counted for CPP. Part of the contribution is deducted in working out income and part is claimed as a tax credit, and the T1 guide sets out which. A person who also has a job has CPP taken from pay, and Schedule 8 works out any overpayment or the amount still owing.
What about an owner of a corporation?
An owner who pays themselves salary from a corporation is an employee for CPP, so the corporation deducts the employee share and pays its own matching share through payroll. An owner who takes only dividends pays no CPP on them, and builds no CPP pension from them. That is one of the points in the salary and dividends guide.
What your books need to show
- Net business income for the year, after expenses, because the contribution is worked out on it.
- A set-aside for the CPP and income tax owing, since nothing is withheld during the year.
- The payment recorded as drawings, not as a business expense, for a sole proprietor.
How much CPP does a self-employed person pay in 2026?
11.9% of net business income between CAD 3,500 and CAD 74,600, to a maximum of CAD 8,460.90, plus 8% on earnings from CAD 74,600 to CAD 85,000, to a maximum of CAD 832.00.
Why is it double what an employee pays?
A self-employed person pays both the employee share of 5.95% and the employer share of 5.95%.
Where is self-employed CPP paid?
On the T1 return, using Schedule 8, with the rest of the tax balance.
Do I pay CPP on dividends from my own corporation?
No. CPP is paid on employment earnings and net self-employment income, not on dividends.
Sole proprietor or corporation? →
Salary or dividends for a BC owner →
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