Final

Question 1

Objective of Payroll

Answer 1

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

Question 2

Compliance

Answer 2

is the observance of official requirements (the rules)

Question 3

Legislation

Answer 3

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.

Question 4

Contract of Service

Answer 4

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.

Question 5

Contract for Service

Answer 5

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.

Question 6

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

Answer 6

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.

Question 7

Employment Standards typically cover:

Answer 7

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.

Question 8

Overtime

Under the Canada Labour Code:

Answer 8

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.

Question 9

Overtime

Under the Ontario Employment Standards Act:

Answer 9

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.

Question 10

Vacation Pay

Answer 10

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

Question 11

Employment Leaves – Examples:

Answer 11

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)

Question 12

5 Types of Deductions from Pay

Answer 12

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

Question 13

Statutory deductions

Answer 13

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

Question 14

Statutory deductions

Deductions authorized by a court order

Answer 14

such as for family support garnishment of wages.

Question 15

Amounts defined under a collective bargaining agreement

Answer 15

union dues or assessments.

Question 16

A recovery

Answer 16

from previously overpaid wages or salary

Question 17

Specific amounts authorized by an employee in writing

Answer 17

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

Question 18

Labour Standards – Employment Standards

Answer 18

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

Question 19

Types of Earnings

Answer 19

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

Question 20

Allowances

Answer 20

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

Question 21

Reimbursements

Answer 21

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

Question 22

Benefits

Answer 22

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

Question 23

Canada Pension Plan

Answer 23

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

Question 24

Canada Pension Plan contribution

Answer 24

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

Question 25

Employment Insurance Premiums

Answer 25

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

Question 26

Taxable Income

Answer 26

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

Question 27

Health Taxes - Ontario

Answer 27

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)

Question 28

Ontario Employer Health Tax (EHT)

Answer 28

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

Question 29

Calculation of Commissions

Answer 29

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

Question 30

There are 3 general methods of calculating Commissions:

Answer 30

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

Question 31

Straight Percentage of Sales

Answer 31

Commission = sales x percentage rate

Question 32

Fixed Amount per Sale

Answer 32

Commission = Fixed dollar amount x number of products sold

Question 33

Multiple Rates per Target Level

Answer 33

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

Question 34

Payroll Remittances

Answer 34

Quarterly Monthly Accelerated 1 Accelerated 2

Question 35

Quarterly

Answer 35

``` 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 ```

Question 36

Monthly

Answer 36

Pay Cycle 1st to end of month Due Date 15th of month following

Question 37

Accelerated 1

Answer 37

Pay Cycle 1st to 15th of month 16th to end of month Due Date 25th of the month 10th of the month following

Question 38

Accelerated 2

Answer 38

``` 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

Question 39

Interruption of Earnings

Answer 39

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

Question 40

Temporary Layoff vs Termination

Answer 40

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.

Question 41

Termination Checklist

Answer 41

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

Question 42

Record of Employment

Answer 42

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.

Question 43

Manually completed paper Records of Employment

Answer 43

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.

Question 44

Records of Employment may also be filed electronically

Answer 44

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

Question 45

Record of Employment (2)

Answer 45

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.

Question 46

Canada Revenue Agency

Answer 46

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

Question 47

Year End Checklist

Answer 47

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.

Question 48

YEAR-END CHECKLIST | TO BE COMPLETED AT END OF OLD YEAR

Answer 48

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

Question 49

YEAR-END CHECKLIST | TO BE COMPLETED AT BEGINNING OF NEW YEAR

Answer 49

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

Question 50

YEAR-END CHECKLIST | PREPARE FOR NEW YEAR

Answer 50

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