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PAYROLL FUNDAMENTALS 1 MIDTERM QUESTIONS AND CORRECT DETAILED ANSWERS ,A COMPLETE SOLUTION THAT COVERS 2024/2025 BEST RATED A+
Typology: Exams
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Information that must be provided to employees (ch.1) - CORRECT ANSWERS -Employee name -Date of pay period -Rates of pay and hours of work at each rate -Gross earnings -Itemized deductions -Net pay Commencement package (Ch.1) - CORRECT ANSWERS -Organization specific forms (personal information forms) -Government forms (federal and provincial personal tax credits return) -Benefit forms (insurance enrollment forms) Hiring form (ch.1) - CORRECT ANSWERS May include information on their position such as department, manager, start date, salary/hourly wage, and benefit entitlement TD1- WS is used to calculate partial claim amounts for... (ch.1) - CORRECT ANSWERS -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) - CORRECT ANSWERS -Name -Date of birth -Social insurance number Other credits employees can claim on their Federal and Provincial/Territorial TD1 to lower taxes (ch.1) - CORRECT ANSWERS -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) - CORRECT ANSWERS -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 ANSWERS -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) - CORRECT ANSWERS -Name -Rate of pay and hours worked at each rate -Date of pay period -Gross and net pay -Itemized deductions Renumeration (ch.2) - CORRECT ANSWERS 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) - CORRECT ANSWERS -Earnings -Allowances -Benefits
-Taxable expense reimbursements Earnings can be paid as... (ch.2) - CORRECT ANSWERS -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) - CORRECT ANSWERS -Pensionable -Insurable -Taxable ...therefore subject to all statutory deductions Define allowances (ch.2) - CORRECT ANSWERS 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) - CORRECT ANSWERS -Car -Meals -Uniforms -Safety shoes or other types of clothing Allowances are... (ch.2) - CORRECT ANSWERS -Not considered income (under certain conditions) ...therefore not subject to statutory withholdings Define benefits (ch.2) - CORRECT ANSWERS 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) - CORRECT ANSWERS -Not included in income (under certain circumstances) ...therefore not subject to statutory dedcuctions Define expense reimbursements (ch.2) - CORRECT ANSWERS Dollar amounts paid to employees to cover expenses that they incur while performing their job Expense reimbursements are.. (ch.2) - CORRECT ANSWERS -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) - CORRECT ANSWERS - Taxable to the employee -Included in income -Subject to statutory deductions What are the factors that affect selecting frequency of pay periods (ch.2) - CORRECT ANSWERS -Accounting cycles -Payment delays -Pay period frequencies that have been negotiated Define regular earnings (ch.2) - CORRECT ANSWERS 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) - CORRECT ANSWERS -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) - CORRECT ANSWERS -A fixed amount of earnings paid to an employee per pay period Annual salary
Number of pays Hourly rate equation (ch.2) - CORRECT ANSWERS Salary per pay period
Pay period normal working hours Annual salary
Annual normal working hours Daily rate equation (ch.2) - CORRECT ANSWERS Salary per pay period
Pay period working days Annual salary
Annual working days Define wages (ch.2) - CORRECT ANSWERS 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) - CORRECT ANSWERS - Manufacturing -Production
-Unionized environments Daily and hourly earnings equations (ch.2) - CORRECT ANSWERS Hourly rate X Pay period regular hours worked Daily rate X Pay period days worked Define piecework and give it's equation (ch.2) - CORRECT ANSWERS -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) - CORRECT ANSWERS -Sick pay -Short-term disability -Long-term disability Define sick pay (ch.2) - CORRECT ANSWERS 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) - CORRECT ANSWERS -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) - CORRECT ANSWERS - Short-term disability -Long-term disability How much is one week worth of vacationable earnings? (ch.2) - CORRECT ANSWERS -2% -1/52 for Saskatchewan
Vacationable earnings equation (ch.2) - CORRECT ANSWERS Vacationable earnings X vacation percentage or fraction Define shift premium (ch.2) - CORRECT ANSWERS 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) - CORRECT ANSWERS (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) - CORRECT ANSWERS [(hourly rate X 1.5) X (hours worked- legislated overtime threshold)] What is the order of calculating statutory deduction (ch.2) - CORRECT ANSWERS -C/QPP -EI -QPIP (Quebec only) -Federal and provincial taxes -Northwest territories/Nunavut payroll taxes What are the CPP and QPP rates? (ch.2) - CORRECT ANSWERS -CPP 4.95% -QPP 5.40% Manual CPP equation (ch.2) - CORRECT ANSWERS (Salary - Pay period exemption) X CPP rate Or look it up in the little book C/QPP is calculated on what? (ch.2) - CORRECT ANSWERS Gross pensionable/taxable income
-earnings -taxable allowances -cash taxable benefits -non-cash taxable benefits EI is calculated on what? (ch.2) - CORRECT ANSWERS Gross insurable income -earnings -taxable allowances -cash taxable benefits Federal and provincial taxes are calculated on what? (ch.2) - CORRECT ANSWERS Net taxable income -earnings -taxable allowances -taxable benefits -LESS any deductions allowed Gross earnings equation (ch.2) - CORRECT ANSWERS Earnings + Taxable allowances + Non- taxable allowances + Cash taxable benefits Gross pensionable/taxable income equation (ch.2) - CORRECT ANSWERS Earnings + Taxable allowances + Cash taxable benefit + Non-cash taxable benefit Gross insurable income equation (ch.2) - CORRECT ANSWERS Earnings + Taxable allowance
-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) - CORRECT ANSWERS -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
-Fixed amount per business km -Credit card or reimbursement for gas purchases Reasonable car allowance is... (ch.3) - CORRECT ANSWERS -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) - CORRECT ANSWERS -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) - CORRECT ANSWERS 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) - CORRECT ANSWERS - 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) - CORRECT ANSWERS - 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) - CORRECT ANSWERS Are considered business- related expense and is not included in income Define clothing allowance (ch.3) - CORRECT ANSWERS 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) - CORRECT ANSWERS -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) - CORRECT ANSWERS -The law requires employees to wear protective clothing -Employee bought the protective clothing -Reimbursement is reasonable Clothing allowances are taxable if... (ch.3) - CORRECT ANSWERS -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) - CORRECT ANSWERS 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) - CORRECT ANSWERS -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) - CORRECT ANSWERS Coverage amount= Annual salary X coverage multiplier Monthly taxable benefit=
1, Pay period taxable benefit= Monthly taxable benefit X 12
Pay period frequency Group sickness and accident insurance plans include... (ch.3) - CORRECT ANSWERS -Short term disability -Long term disability -Accident insurance plans Private health insurance plans can cover what? (ch.3) - CORRECT ANSWERS -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) - CORRECT ANSWERS -Physical or mental counseling -Family counseling Counseling services outside of an assistance plan, that are not taxable are... (ch.3) - CORRECT ANSWERS -Physical or mental counseling
-Re-employment (job placement counseling) -Retirement counseling Canada gift and award guidelines (ch.3) - CORRECT ANSWERS -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) - CORRECT ANSWERS -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) - CORRECT ANSWERS - 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) - CORRECT ANSWERS -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) - CORRECT ANSWERS - Regular loan -Home purchase loan Automobile taxable benefit equation (ch.3) - CORRECT ANSWERS Standby charge + operating cost benefit - employee reimbursement
Automobile availability equation (ch.3) - CORRECT ANSWERS # of calendar days available to employee
30 Standby charge for company owned (ch.3) - CORRECT ANSWERS 2% X (cost of car + taxes) X availability Reduced standby charge for company owned (ch.3) - CORRECT ANSWERS -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) - CORRECT ANSWERS .25 X personal km driven Optional operating cost benefit equation for company owned and leased (ch.3) - CORRECT ANSWERS -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) - CORRECT ANSWERS 2/3 X (monthly cost of car + taxes) X availabillty
Reduced standby charge for company leased (ch.3) - CORRECT ANSWERS -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) - CORRECT ANSWERS Personal km -------------- X (operating cost + Total km applicable tax) Retroactive adjustment (ch.4) - CORRECT ANSWERS 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) - CORRECT ANSWERS 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) - CORRECT ANSWERS 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) - CORRECT ANSWERS 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) - CORRECT ANSWERS -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) - CORRECT ANSWERS 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)