What is the best way to handle the following.  For 2008 the CPP max. is $44900.  The problem is the company changed names/ownership in March of this year and started a new company within Simply Acct.  As far as wages and the employees were concerned there were no changes or interruption in their wages. (In fact some weren't even aware of the change).   The problem is that some of the employees who would have normally reached their max. CPP deduction at this time haven't as the employees YTD is showing earnings from March only  'til now.  Obviously, the old company and the new one together total more than the max.  But what is the correct way to handle this.  ShouId I manually deduct the CPP for those individual employees who have reached the max. between the two companies (but then I'm afraid that might show as an under-deduction) or is this treated as a whole new co./entity and just explain that to the employees.  Some of them are complaining as they are used to the extra money on their paycheques by now. 

Any suggestions/help is greatly appreciated.

Hi there:  If you started paying the employees in a totally new company then you must carry on and deduct them in the new company until they have reached maximum there.  You will be issuing two T4's for them all I assume.  One for the previously named/owned company and one for the new company.  They will show overdeductions for CPP but they will get any overage back when they file their tax returns next Spring.  (Doesn't help them now however.) 

The one that loses in this scenario is the new company because any overages for each employee that the employee gets back, the new company will not.  So they will seem to be "overpaying" as well.  

Is the new name/ownership an actual new entity or simply a purchase of shares of the previous company?  You should make sure of what the new structure is just in case Revenue Canada would say that it is the "same" company and employees don't have to start anew with the CPP deductions.  But from what you have said it sounds like you do, in which case you have no choice but to keep deducting.  Rita Deering

Rita is absolutely correct.

If you now have a new company with a new business number, this new company will need to make complete deductions and remittances for CPP.

If however, you are dealing with a takeover of an existing company (share purchase) and the new entity is operating with the old company's business number you will continue deductions and remittances from the past.

While the employees may not have noticed any difference in operations the legal situation is what will determine which method you need to follow for deductions.