unit 4: Earnings and Deductions Flashcards Preview

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Flashcards in unit 4: Earnings and Deductions Deck (34):
1

most Canadian's get their income from what?

from working job where they perform certain tasks in exchange for a wage

2

what are a number fo ways compensation can take from

1. hourly
2. annual salaries
3. non-wage benefits (such as health coverage or pensions)

3

what are the 12 most common types of pay

1. Regular pay (hourly or annual salary)
2. Overtime pay
3. Shift premiums
4. commission
5. Bonus
6. Retroactive
7. Sick Pay
8. Vacation Pay
9. Statutory holiday pay
10. pay in lieu of notice
11. severance payments
12. Death benefits

4

define regular pay

salary an employee is paid (can be hourly wage or annual salary)
ontario - must be at least monthly
calculate salary per pay, - divide the annual salary by the number of pay periods in the year

5

Overtime pay

hours worked beyond the legislative requirements (after 44 hours)

6

shift premimums

additional amounts paid to employees for working extra/odd ours such as midnight shifts

7

commission

typically a percentage of the goods sold by the employee

8

bonus

lump sum amounts paid to employees in addition to their regular pay

9

Retroactive earnings

paid for amounts earned in earlier periods, such as giving a rise with a past date attached to it

10

Sick Pay

not a legislative requirement
amounts paid to employees for time off due to illness

11

what is another option for sick pay

wage loss replacement
where the employer and / or employee pay premiums to fund time off for illness. (usually short term and long term disability)

12

Vacation pay

legislative requirement
- earned on dollar one
- 4% of earnings
not all employees are entitled to coverage for vacation under ESA (ie Public Accountants)

13

Statutory Holiday Pay

9 public holidays
statutory requirement

14

Pay in leiu of notice

upon termination of employee if the proper period of notice is not given as per legislation

15

Death benefits

amounts paid upon the death of an employee to a beneficiary or estate of the employee

16

what are Allowance and Expense Reimbursements

amounts paid to employees for the use of their personal property for business or to cover expenses they may incur while performing the duties of their job

17

What are allowances and are they taxable

they are cash in hand of the employee
- therefore considered earnings
- reported on t4

18

what is a car allowance

payment that employee receives from their employer for using their own vehicle to perform duties of their job

19

what can car allowance be based on?

1. flat amount - usually taxable
2. or a reasonable per km rate - not considered taxable

20

what is the reasonable km rate

$0.54 for the first 5000 km's and $0.48/ km for additional kms

21

what is clothing allowance

amounts paid to employees if required to purchase uniforms or for upkeep/replacement costs

22

when is a clothing allowance taxable

if the clothing is not protective or if it is deemed to be unreasonable

23

what is a meal allowance/ reimbursement

amounts paid to employees who may incur costs for meals

24

How are meal allowances paid

can be paid based on
1. overtime hours
2. flat amount per day when employee travels
3. reimbursement if the employee buys a meal when on company business

25

when is a meal allowance taxable

depends on the reasonabiliy of the amount, the frequency of the overtime worked and
expense claimed

26

what are some other types of allowances and expenses often paid by companies

1. moving
2. parking
3. travel
4. tools
5. tuition

27

what is an expense reimbursement

simply repaying the employee for an expense they incurred
- must have receipts

28

is an expense taxable

no, does not show up on a T4

29

What are benefits

amounts paid on behalf of an employee by an employer

30

what are some most commons benefits paid by an employer

group benefits (health and dental or Life Insurance)

31

When are benefits taxable

typically any form of insurance (life, accidental death or critical illness ) paid by employer on behalf of employee would be considered taxable to the employee - added to T4

32

what is another way to refer to benefits

non-cash beneftis - non cash enters the employees hand

33

What are staturtory deductions

deductions required by legislation (CPP, EI IT)

34

What is the order of deductions

1. CPP
2. EI
3. Federal and Provincial Income tax
4. Legal deductions (ie garnishment)
5. Company compulsory deductions (ie union dues)
6. Voluntary deductions (ie. employee's request canada savings bonds or charitable donations)