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Canadian Financial, Real Estate and Mortgage Glossary
How often this word is used
62% - Often
62% - Often
Canada Pension Plan
|Synonyms:||canadian pension plan|
|Filed Under:||government, investments, taxation|
|Broadly associated with:||[Government of Canada]|
|Narrowly associated with:||[Service Canada]|
Definition of Canada Pension Plan (CPP)
- Canada Pension Plan (CPP)
- 1. A social insurance program run by the Government of Canada. Canadians 18 and older contribute a portion of their income into a pension plan administrated by Human Resources and Social Development Canada (HRSDC). As of 2012, taxpayers contribute 4.95% of their earnings toward the Canada Pension Fund (CPP) to a maximum of $2,306.70. Employee contributions are matched by their employer, effectively doubling the employee's contributions.
Related Terms and Acronyms:
- annuity A financial instrument that disperses a number of payments over a set period of time.
- Canada Pension Plan Investment Board Act (CPPIB)
employment insurance (EI)
A Service Canada program where premiums are paid by taxpayers and benefits are provided for the unemployed.
➥ Formerly known as Unemployment Insurance (UI).
- fringe benefit Employee compensation other than your wages, tips and salaries, such as health insurance, life insurance and pension plans. Usually referred to as a Bonus.
- garnishment An amount withheld from your pay and remitted to another party, such as a creditor. You must include in your taxable income any amount that was garnished from your pay, because the full amount of your pay is considered to have been received by you even though some was withheld to pay your debts.
- income tax The main source of revenue for the federal government and many Provinces. The tax is based on your earned and unearned income. The amount or percentage taxed is based on the amount of income, using the governments graduated tax scale.
- old age security (OAS) A Canadian pension plan for eligible Canadians over the age of 65.
- payroll taxes A tax based on wages and salaries that is deducted from employees pay cheques.
- pension A retirement plan where money is set aside over many years for an individual's retirement.
- Tax-Free Savings Account (TFSA) A savings account for Canadians where income earned is not taxed.
Broad and Narrow Associations
[Government of Canada]
Registered Retirement Savings Plan (RRSP) — Canada, Very Important
A savings plan introduced by the federal government to encourage Canadians to save money for retirement. The investment and the interest earned on it is sheltered: it will not be taxed as long as it is left in the plan.
➥ Tax deferred investment contribution used to reduce income tax.
Canada Mortgage Bonds (CMB) — Est. 2001, Canada, Very Important
A fully guaranteed fixed interest rate income investment backed by CMHC (a crown corporation of the Government of Canada).
➥ Issued by the Canada Housing Trust (CHT).
Registered Education Savings Plan (RESP) — Canada, Very Important
An investment vehicle used for a child's post-secondary education.
➥ RESPs are offered by most financial institutions in Canada.
Home Buyers' Plan (HBP) — Canada, Very Important
A way for a homebuyer to use part of his or her RRSP as a down payment on a mortgage.
➥ Government assistance for first-time homebuyers.
Canada Mortgage and Housing Corporation (CMHC) — Company Est.1946, Canada-wide, Very Important
The Canada Mortgage and Housing Corporation: this is a Federally run institution that provides banks and lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure CMHC assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also "G.E. Capital."
➥ Insures Canadian mortgage lenders.
Guaranteed Income Supplement (GIS) — Canada, Important
➥ Program offered through Canada’s Old Age Security (OAS) pension providing supplement income to Canadians 65 years of age or older.
yearly maximum pensionable earnings (YMPE) — Canada
The maximum limit to the amount of pensionable earnings a contributor would receive from the Canada Pension Plan (CPP). This value is indexed annually by the Canadian Federal Government and used in the calculation of the CPP Bridge Benefit. Pensions increase based on the Consumer Price Index (CPI).
➥ A term used relation to the Canadian Pension Plan.
Language Instruction for Newcomers to Canada (LINC) — Canada
➥ Provides free basic French and English language courses to new Canadian permanent residents.
allowance (ALW) — Canada
➥ In relation to Guaranteed Income Supplement (GIS).
- allowance for the survivor (ALWS) — Canada
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