Download Payroll Fundamentals 1 Midterm 94 QUESTIONS WITH VERIFIED SOLUTIONS 2024 and more Exams Business Administration in PDF only on Docsity!
Payroll Fundamentals 1 Midterm 94 QUESTIONS
WITH VERIFIED SOLUTIONS 2024
Commencement package (Ch.1)
- Organization specific forms (personal information forms)
- Government forms (federal and provincial personal tax credits return)
- Benefit forms (insurance enrollment forms) Hiring form (ch.1) May include information on their position such as department, manager, start date, salary/hourly wage, and benefit entitlement Information that must be provided to employees (ch.1)
- Employee name
- Date of pay period
- Rates of pay and hours of work at each rate
- Gross earnings
- Itemized deductions
- Net pay TD1- WS is used to calculate partial claim amounts for... (ch.1)
- Age
- Canada caregiver amount for eligible dependent or spouse or common-law partner
- Canada caregiver amount for dependent(s) age 18 or over Federal TD1, Provincial/territorial TD1, and Quebec TP-1015.3-V require... (ch.1)
- Name
- Date of birth
- Social insurance number Other credits employees can claim on their Federal and Provincial/Territorial TD1 to lower taxes (ch.1)
- Being a caregiver
- Being over 65
- Receiving a pension
- Being or supporting a student in post-secondary studies
- Being disabled
- Supporting a spouce
- Living alone (Quebec)
- Having children under 18 (Saskatchewan and Yukon) Do you have to claim basic personal provincial/territorial credits? (ch.1)
- No, if only doing basic
- Yes, if claiming children under 18 (Sakatchewan and Yukon)
- Yes, always (Quebec) Employers should review TD1 and TP-1015.3-V forms to ensure (ch.2)
- Correct employee name, Date of birth, Address, and SIN
- Correct amounts on the form
- Amounts claimed are totaled correctly
- Form does not contain obvious false statements
- The form is signed a dated What certain information must appear on an employee's statement of wages? (ch.2)
- Name
- Rate of pay and hours worked at each rate
- Date of pay period
- Gross and net pay
- Itemized deductions Renumeration (ch.2) Employee received compensation or pay for the services they perform
- AKA employee income when employer-employee relationship exists Employee income can be categorized into what? (ch.2)
- Earnings
- Allowances
- Benefits
- Taxable expense reimbursements Earnings can be paid as... (ch.2)
- Salary
- Rate for each hour worked
- Rate per piece of goods produced or picked
- Disability payment for time off due to illness
- Payment for vacation time
- Premium payment for overtime
- Premium payment for hours worked on a shift Earnings are... (ch.2)
- Pensionable
- Insurable
- Taxable ...therefore subject to all statutory deductions Define allowances (ch.2)
The additional dollar amounts paid to employees for the use, or anticipated use of their personal property for business purposes What are the common types of allowances? (ch.2)
- Car
- Meals
- Uniforms
- Safety shoes or other types of clothing Allowances are... (ch.2)
- Not considered income (under certain conditions) ...therefore not subject to statutory withholdings Define benefits (ch.2) Dollar values attributed to something the employer has either provided to an employee or paid for on behalf of the employee Benefits are... (ch.2)
- Not included in income (under certain circumstances) ...therefore not subject to statutory dedcuctions Define expense reimbursements (ch.2) Dollar amounts paid to employees to cover expenses that they incur while performing their job Expense reimbursements are.. (ch.2)
- Usually submitted through the accounting department ...therefore not considered in the calculation of employee income
- Can go through payroll, in which case they are not subject to statutory deductions, but WILL affect net pay If a reimbursement is for personal living expenses it is... (ch.2)
- Taxable to the employee
- Included in income
- Subject to statutory deductions What are the factors that affect selecting frequency of pay periods (ch.2)
- Accounting cycles
- Payment delays
- Pay period frequencies that have been negotiated Define regular earnings (ch.2) The dollar amount paid to employees on a pay period basis for the performance of their day-to-day duties List the types of regular earnings (ch.2)
- Salary
- Hourly wages
- Piecework
- Self-insured disability payments
- Vacation pay
- Overtime
- Shift premiums Define salary, and what is the formula for calculating it? (ch.2)
- A fixed amount of earnings paid to an employee per pay period Annual salary
Number of pays Hourly rate equation (ch.2) Salary per pay period
Pay period normal working hours Annual salary
Annual normal working hours Daily rate equation (ch.2) Salary per pay period
Pay period working days Annual salary
Annual working days Define wages (ch.2) Earnings which are based on the amount of time worked, usually at a rate per hour or per day Hourly rates are a common method in what field of work? (ch.2)
- Manufacturing
- Production
- Unionized environments Daily and hourly earnings equations (ch.2) Hourly rate X Pay period regular hours worked Daily rate X Pay period days worked Define piecework and give it's equation (ch.2)
- Rate of pay earned per unit of production Rate X Number of pieces What are the main types of self-insured plans coverage? (ch.2)
- Sick pay
- Short-term disability
- Long-term disability Define sick pay (ch.2) An amount paid to an employee who is absent from work due to illness or injury What is the difference between formal and informal plans for sick pay? (ch.2)
- Formal plans outline the amount of sick leave available, amount of sick pay, and if it carries over in the next year
- Informal plans are based on the manager's discretion What are the two types of Wage-Loss Replacement Plans (ch.2)
- Short-term disability
- Long-term disability How much is one week worth of vacationable earnings? (ch.2)
- 2%
- 1/52 for Saskatchewan Vacationable earnings equation (ch.2) Vacationable earnings X vacation percentage or fraction Define shift premium (ch.2) Additional amounts paid over and above an employee's normal salary or hourly rate for working on an evening or midnight shift Shift premium equation (ch.2) (hourly rate X shift premium %) X hours worked on shift Fixed dollar amount X hours worked on shift Fixed dollar amount X Number of shifts Overtime pay equation (ch.2) [(hourly rate X 1.5) X (hours worked- legislated overtime threshold)] What is the order of calculating statutory deduction (ch.2)
- C/QPP
- EI
- QPIP (Quebec only)
- Federal and provincial taxes
- Northwest territories/Nunavut payroll taxes What are the CPP and QPP rates? (ch.2)
- CPP 4.95%
- QPP 5.40% Manual CPP equation (ch.2) (Salary - Pay period exemption) X CPP rate Or look it up in the little book C/QPP is calculated on what? (ch.2) Gross pensionable/taxable income
- earnings
- taxable allowances
- cash taxable benefits
- non-cash taxable benefits EI is calculated on what? (ch.2) Gross insurable income
- earnings
- taxable allowances
- cash taxable benefits Federal and provincial taxes are calculated on what? (ch.2) Net taxable income
- earnings
- taxable allowances
- taxable benefits
- LESS any deductions allowed Gross earnings equation (ch.2) Earnings + Taxable allowances + Non-taxable allowances + Cash taxable benefits Gross pensionable/taxable income equation (ch.2) Earnings + Taxable allowances + Cash taxable benefit + Non-cash taxable benefit Gross insurable income equation (ch.2) Earnings + Taxable allowance + Cash taxable benefit Taxable renumeration equation (NT/NU) (ch.2) Earnings + Taxable allowances + Cash taxable benefits + Non-cash taxable benefit Taxable cash allowances are... (ch.3)
- Are added to employee's earnings and are a part of their take home pay
- INCLUDED in Gross Earnings (GE), Gross Pensionable and Taxable Income (GPTI), and Gross Insurable Earnings (GEI)
- SUBJECT to C/QPP, EI, QPIP, Federal and Provincial Tax and NT/NU Tax Taxable expense reimbursements are... (ch.3)
- INCLUDED in Gross Earnings (GE), Gross Pensionable and Taxable Income (GPTI), and Gross Insurable Earnings (GEI)
- SUBJECT to C/QPP, EI, QPIP, Federal and Provincial Tax and NT/NU Tax *** Taxable benefits are... (ch.3)**
- Determined if taxable to the employee by the CRA or RQ
- IF employer pays cost of benefit to a third party the value is included in the employee's income as NON- CASH TAXABLE BENEFIT
- IF the employer reimburses employees for money they paid for the benefit the reimbursement is included in the employees income as a CASH TAXABLE BENEFIT - Added to employee's earnings and are a part of their take home pay Non-cash taxable benefits are.. (ch.3)
- SUBJECT to all statutory withholdings except for EI and QPIP
- Is only a value added to to the employee's pay for the purpose of calculating statutory deductions Define car allowance (ch.3)
- An amount paid or reimbursed to an employee who uses their personal automobile for business
- Taxability is based on whether the allowance is considered reasonable or unreasonable by the federal and Quebec government Car allowances can be provided as a... (ch.3)
- Flat amount
- Fixed amount per business km
- Credit card or reimbursement for gas purchases Reasonable car allowance is... (ch.3)
- The allowance is based solely on business km
- The amount provided is based on government prescribed reasonable guidelines ($.54 first 5,000 km, $.48 each km after)
- The employer does not reimburse the employee for expenses related to the same use of the vehicle Unreasonable car allowance is... (ch.3)
- Flat amount that is not based solely on business km
- Fixed amount per business km is either lower or higher than government prescribed reasonable rates
- Credit card of reimbursement for gas purchases Define meal allowance (ch.3) A reimbursement intended to cover the cost of missed meals due to working over time and meal expenses incurred while on employer business Overtime meal allowances are non-taxable for Canada if... (ch.3)
- Reasonable ( up to $17)
- Employee must work two or more hours of overtime
- Overtime is infrequent Overtime meal allowances are non-taxable for Quebec if... (ch.3)
- Overtime is at the request of the employer and is over 2 hours
- Occur on an occasional basis
- Employee presents receipts
- Value of the meal is reasonable Meal allowance on a business trip (Ch.3) Are considered business-related expense and is not included in income Define clothing allowance (ch.3) An amount paid or reimbursed for the purchase of a particular type of clothing required for work Clothing allowance can be provided as.. (ch.3)
- An amount based on receipts submitted
- A flat dollar amount The cost of protective clothing not supported by receipts is non-taxable if... (Ch.3)
- The law requires employees to wear protective clothing
- Employee bought the protective clothing
- Reimbursement is reasonable Clothing allowances are taxable if... (ch.3)
- The clothing is neither a distincitve uniform nor required for safety reasons
- They are subject to statutory deductions; with no additional GST/HST/QST components Define cash benefit (ch.3) When an employer reimburses an employee for an item that is considered a benefit Registered Retirement Savings Plan are considered non-cash taxable benefits when... (ch.3)
- Employee cannot withdraw the amounts until they are retired
- Can only withdraw under Home Buyers' Plan or Lifelong Learning Plan Group term life insurance plans equation (ch.3) Coverage amount= Annual salary X coverage multiplier Monthly taxable benefit= Coverage amount X premium rate
1, Pay period taxable benefit= Monthly taxable benefit X 12
Pay period frequency Group sickness and accident insurance plans include... (ch.3)
- Short term disability
- Long term disability
- Accident insurance plans Private health insurance plans can cover what? (ch.3)
- Supplementary hospital
- Drugs
- Private duty nursing
- Paramedical services
- Medical supplies and services
- Out of province emergency
- Hearing aids
- vision care
- Dental expense Employee assistance plans cover... (ch.3)
- Physical or mental counseling
- Family counseling Counseling services outside of an assistance plan, that are not taxable are... (ch.3)
- Physical or mental counseling
- Re-employment (job placement counseling)
- Retirement counseling Canada gift and award guidelines (ch.3)
- No limit
- Single $500 exemption to total of all gift and awards
- Long service awards do not affect the single $500 exemption
- Near cash gifts and awards are treated the same a non-cash taxable benefits
- Gifts and awards in cash are not subject to GST/QST/HST
- Material gifts and awards are subject to GST/QST/HST Quebec gift and award guidelines (ch.3)
- No limit
- $500 exemption for gifts
- $500 exemption for awards
- Gifts and awards paid in cash are taxable
- Gift certificates, gift coupons, and smart cards are not considered taxable CRA guidelines for cell phone use not being a Taxable benefit (ch.3)
- Plan's cost is reasonable
- Basic plan with fixed cost
- No charges over the fixed cost of the basic amount RQ guidelines for cell phone and internet use not being a taxable benefit (ch.3)
- Services are primarily for the employer
- Personal use does not result in addition fees What are the two types of loans offered by employers? (ch.3)
- Regular loan
- Home purchase loan Automobile taxable benefit equation (ch.3) Standby charge + operating cost benefit - employee reimbursement Automobile availability equation (ch.3)
of calendar days available to employee
30 Standby charge for company owned (ch.3) 2% X (cost of car + taxes) X availability Reduced standby charge for company owned (ch.3)
- IF more than 50% is business related
- IF personal use doesn't exceed 20,004 km/year Personal km -------------- = Qi 1667 X availability
Qi X [2% X (cost of car + Taxes) X availability] Operating cost benefit equation for company owned and leased (ch.3) .25 X personal km driven Optional operating cost benefit equation for company owned and leased (ch.3)
- IF notified to use this
- IF more than 50% is business
- IF standby charge is included in employee's income Standby charge X 50% Standby charge equation for company leased (ch.3) 2/3 X (monthly cost of car + taxes) X availabillty Reduced standby charge for company leased (ch.3)
- IF more than 50% is business related
- IF personal use doesn't exceed 20,004 km/year Personal km -------------- = Qi 1667 X availability Qi X [2/3 X (cost of car + Taxes) X availability] Personal cost equation (ch.3) Personal km -------------- X (operating cost + Total km applicable tax) Retroactive adjustment (ch.4) A non-regular payment that is required when the increase in wages is processed after the increase has been awarded
- Use retroactive tax method Retroactive increase (ch.4) A non-regular payment that is required when an increase in wages is awarded and the effective date is backdated
- Use retroactive tax method Retroactive payment (ch.4) A non-regular payment that is required when an employee whose employment was terminated, is later reinstated, with back pay, as a result of a court decision or union intervention
- Use regular payroll deduction method
Bonus or incentive pay (ch.4) A non-regular payment made to an employee, over and above regular wages Bonus pay can be for all of the following reasons (ch.4)
- Work related
- Tied to production or work performance
- Discretionary
- Recognition of a job well done
- Meeting certain goals or deadlines
- Being part of an organization's profit sharing plan
- Signing a pre-employment bonus
- Retention bonus Vacation pay (ch.4) A non-regular payment to an employee who goes on vacation Special situations of vacation payment to the employee when no time has been taken (ch.4)
- Payout of excess accrued vacation
- Payout of accrued vacation on termination of employment
- Payout of accrued vacation as a result of an Employment Standards approval