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Payroll > Final > Flashcards

Final Flashcards

1
Q

Objective of Payroll

A

To pay employees accurately, on time,
and in compliance with legislative
requirements.

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2
Q

Compliance

A

is the observance of official requirements (the rules)

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3
Q

Legislation

A

refers to laws enacted by a legislative body.

In Canada there are many legislative sources that payroll administrators must comply with at two separate levels: the federal and provincial governments.

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4
Q

Contract of Service

A

an arrangement whereby an individual (the employee) agrees to work on a full-time or part-time basis for an employer for a specified or indeterminate period of time.

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5
Q

Contract for Service

A

is a business relationship whereby one party agrees to perform certain specific work stipulated in the contract for another party.

A person who carries out a contact for service may be considered a contract worker, a self-employed person or an independent contractor.

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6
Q

If you compensate a worker for services performed you may be an employer based on SEVEN tests:

A
  1. Amount of control over a worker’s actions.
  2. Who provides the necessary tools.
  3. Option to hire assistants or to sub-contract work
  4. Degree of personal financial risk
  5. If the worker has responsibility for investment
  6. If there is a chance of profit or risk of loss to worker.
  7. The amount of integration of the worker into the organization.
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7
Q

Employment Standards typically cover:

A 
Hours of regular work.
Overtime rules.
Minimum wages.
Pregnancy, maternal, paternal and other Leaves.
Statement earnings and deductions.
Minimum age.
Statutory Holidays
Successor employers.
Vacation pay or entitlement.
Termination.
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8
Q

Overtime

Under the Canada Labour Code:

A

hours worked over a “standard” eight hours per day or forty hours per week should be paid at a rate of 1.5 times the normal per hour rate of pay.

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9
Q

Overtime

Under the Ontario Employment Standards Act:

A

hours worked exceeding forty-four hours in any week. The amount of pay is the same as under federal legislation at 1.5 times the regular rate of pay.

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10
Q

Vacation Pay

A

An employment entitlement in Canada is the earning of vacation pay.

It can be paid each pay cycle in addition to regular earnings, or

Accrued to be paid when the employee takes vacation/time off from the job.

Canada Labour Code the rate is:
4% of the wages for the first five years of employment
6% for six or more consecutive years

Ontario Employment Standards
4% of wages only

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11
Q

Employment Leaves – Examples:

A 
Pregnancy/Maternity Leave
Parental Leave
Compassionate Leave
Bereavement Leave
Sick Leave
Family Medical Leave
Organ Donor
Personal Emergency
Reservist Leave
(See pages 23 & 24 for details)
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12
Q

5 Types of Deductions from Pay

A

Statutory deductions
Deductions authorized by a court order
Amounts defined under a collective bargaining agreement
A recovery
Specific amounts authorized by an employee in writing

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13
Q

Statutory deductions

A

required by law such as Canada Pension Plan contributions, Employment Insurance premiums, and income taxes.

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14
Q

Statutory deductions

Deductions authorized by a court order

A

such as for family support garnishment of wages.

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15
Q

Amounts defined under a collective bargaining agreement

A

union dues or assessments.

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16
Q

A recovery

A

from previously overpaid wages or salary

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17
Q

Specific amounts authorized by an employee in writing

A

These may be for amounts as for group insurance premiums, charitable contributions or savings bonds.

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18
Q

Labour Standards – Employment Standards

A

The common information that must appear on a paystub is:
employee name / employee number
pay period dates
rate of pay and hours of work at each rate
gross earnings
itemized deductions – with enough detail so they can be identified
net pay / amount received

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19
Q

Types of Earnings

A 
Salary
Hourly
- Regular rate
- Shift premium
Overtime
Vacation pay
Gratuities and Tips
Statutory holiday
Piece rate
Bonuses
Commissions
Severance Pay, Pay in Lieu 
Retiring Allowances
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20
Q

Allowances

A

Amounts paid to an employee to compensate them for the use of their assets.

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21
Q

Reimbursements

A

Where the employee personally pays on behalf of the employer and then is paid back by the employer at a later date

22
Q

Benefits

A

Benefits are payments made by the employer that is for the personal benefit of the employee.

23
Q

Canada Pension Plan

A

Contributions from payroll withholdings for employees:
Over the age of 18
Under the age of 70
Not receiving disability benefits under the Canada Pension Plan or Quebec Pension Plan

Employers match employee contributions 1:1

24
Q

Canada Pension Plan contribution

A 
Gross Earnings
Less:  non-taxable allowances
Less:  amounts paid on termination
Plus:  taxable benefits
=   Pensionable Earnings
Less:  pay cycle exemption
=   Contributory Earnings
X   4.95%
=    Canada Pension Plan contribution
25
Q

Employment Insurance Premiums

A

Contributions are based on Insurable Earnings calculated as:
Gross Earnings
Less:
Non-taxable allowances
Non-cash benefits
Earnings related to termination of employments
= Insurable Earnings

Premium is Insurable Earnings x 1.88% to an annual maximum of $930.60

Employers pay 1.4 times the premium the employee pays

26
Q

Taxable Income

A

Gross taxable income is calculated as:
Gross earnings
Less non-taxable allowances
Plus taxable benefits

Net taxable income is:
Gross taxable income less:
Employee deductions for Registered Pension Plan
Employee deductions for RRSP contributions
Union dues withheld
Other CRA approved deductions

27
Q

Health Taxes - Ontario

A

Combination of Employer and Employee Tax:

Ontario funds its health care using two methods

there is an employer tax, the Employer Health Tax (EHT) and there is also an employee tax, the Ontario Health Premium (OHIP)

28
Q

Ontario Employer Health Tax (EHT)

A

Most employers are exempt for the first $450,000 of payroll

The tax rate of 1.95% of payroll.

If an employer has payroll less than $600,000 than an annual return and payment is required by March 15th of the year following.

If the employer’s payroll is in excess of $600,000 then monthly instalments need to be made

29
Q

Calculation of Commissions

A

The method an organization uses to calculate commission payments is usually specified in either an employment contract or a collective agreement

30
Q

There are 3 general methods of calculating Commissions:

A

Straight Percentage of Sales
Fixed Amount per Sale
Multiple Rates per Target Level

31
Q

Straight Percentage of Sales

A

Commission = sales x percentage rate

32
Q

Fixed Amount per Sale

A

Commission = Fixed dollar amount x number of products sold

33
Q

Multiple Rates per Target Level

A

Commission = Zero to first target x first percentage rate + amount in excess of first target to secondtargetx second percentage rate + amount in excess of second target x third percentage rate

34
Q

Payroll Remittances

A

Quarterly
Monthly
Accelerated 1
Accelerated 2

35
Q

Quarterly

A 
Pay Cycle
January 1 to March 31
April 1 to June 30
July 31 to September 30
October 1 to December 31
Due Date
April 15
July 15
October 15
January 15
36
Q

Monthly

A

Pay Cycle
1st to end of month

Due Date
15th of month following

37
Q

Accelerated 1

A

Pay Cycle
1st to 15th of month
16th to end of month

Due Date
25th of the month
10th of the month following

38
Q

Accelerated 2

A 
Pay Cycle
1st to 7th of month
8th to 14th of month
15th to 21st of month
22nd to end of month

Due Date
3rd business day following end of period date

39
Q

Interruption of Earnings

A

When an employee is expected to have 7 consecutive calendar days without either work or insurable earnings.
Note: vacation time taken is insurable and cannot be used during this time

40
Q

Temporary Layoff vs Termination

A

A layoff is considered temporary if the employee is expected to be recalled within 13 weeks of the date last worked.
There does not need to be a period of notice or pay in lieu

If the employee who is laid off and is expected not to recalled within 13 weeks is deemed to be terminated.

41
Q

Termination Checklist

A

A temporary layoff requires only a few steps but a checklist is suggested when there is a termination to ensure nothing is missed.

42
Q

Record of Employment

A

Used by Service Canada for Employment Insurance claims to determine:
Whether or not a claimant is entitled to receive benefits.
The number of weeks that the claimant is entitled for benefits.
The dollar value of benefits per week that the claimant is entitled to receive.

43
Q

Manually completed paper Records of Employment

A

must be completed in triplicate with the original mailed or delivered to the employee, the second copy mailed to Service Canada and one copy kept on file by the employer. They must be completed within five calendar days of:
The first day of the interruption of earnings, or
The first day the employer is aware of the interruption of earnings.

44
Q

Records of Employment may also be filed electronically

A

and in this situation the employer must file within five calendar days of the end of the normal pay cycle in which the interruption of earnings takes place. The employee does not need to receive a copy of the Record of Employment

45
Q

Record of Employment (2)

A

Be sure you can complete an ROE

Special attention needs to be paid to the following fields:

Block 15A – Total insurable hours worked in the last year plus one pay cycle, or since the last Record of Employment was issued.

Block 15B – Total insurable earnings in the last six months plus one pay cycle, or since the last Record of Employment was issued.

46
Q

Canada Revenue Agency

A

A T4 information slip for each person employed in a calendar year must be completed and submitted to the Canada Revenue Agency by the last day of February following.
A copy of the T4 slip must be given to or mailed to the employee.
A copy of the T4 slip must be kept on file by the employer.

*Be able to fill out a T4 slip from information given

47
Q

Year End Checklist

A

Give examples for:

What needs to be done in the current year,

What needs to be done before the end of year,

What needs to be done in the new year.

48
Q

YEAR-END CHECKLIST

TO BE COMPLETED AT END OF OLD YEAR

A
  1. Ensure taxable company car benefits are updated prior to final pay processing
  2. Ensure all expenses and reimbursements are paid by final pay processing
  3. Ensure all manual cheques are recorded
49
Q

YEAR-END CHECKLIST

TO BE COMPLETED AT BEGINNING OF NEW YEAR

A
  1. Have all required forms on hand
  2. Ensure all remittances have been reconciled to online account information/statements from each agency and government department
  3. Complete T4 slips and summary
  4. Check due date for all remittances – ensure you have enough preparation time
  5. YOU CANNOT BE LATE ON REMITTANCES – CHECK AGAIN
50
Q

YEAR-END CHECKLIST

PREPARE FOR NEW YEAR

A
  1. Make sure all programs and tables are updated with new rates
  2. Check carry forward and any outstanding amount owed to employees
  3. Communicate to employees – impact of changes to tax rates, exemptions or other information

Payroll (12 decks)

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