By Jason Heath, CFP on July 3, 2026 Estimated reading time: 5 minutes

Should you incorporate to avoid CPP contributions?

By Jason Heath, CFP on July 3, 2026 Estimated reading time: 5 minutes

Incorporating can eliminate the need to pay CPP contributions if you are self-employed but there are trade-offs that should be considered.

An unincorporated sole proprietor must contribute to the Canada Pension Plan (CPP) when they file their personal tax return. These contributions can be up to $9,292.90 for 2026. 

Some taxpayers may not even notice this, but line 42100 on a T1 tax return is CPP Contributions Payable on Self-Employment Income and Other Earnings. Contributions are calculated on Schedule 8 or Form RC381, whichever applies.

Most self-employed individuals must pay CPP contributions, but there may be alternatives. Whether or not it is worth pursuing them is another story.

If you are under age 65, you must contribute to the CPP if you earn a salary or self-employment income. Once you are 65, until age 70, you can elect to stop CPP contributions. 

If you are an employee, you must submit Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election to your employer(s) and to the Canada Revenue Agency (CRA). You must be receiving a CPP or Québec Pension Plan (QPP) retirement pension and be between ages 65 and 70. 

Self-employed taxpayers must complete Schedule 8, Canada Pension Plan Contributions and Overpayment (for all except QC) as part of their tax return by the filing deadline for it to apply for the previous tax year. Québec residents can opt out of QPP when filing their TP1 provincial income tax return.

What if you are under 65?

There is an option for younger taxpayers to opt out of CPP or QPP if they are self-employed. If they earn their self-employment income through a corporation they own and pay themselves dividends instead of........

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