Chapter 3 Flashcards
CPP and EI requirements
Name three common types of allowances that employers provide to employees
- costs for cars
- meals
- uniforms
-safety shoes
-other work-related clothing
The company pays for the safety boots that Jennifer Giles must wear on the job. taxable or non-taxable
non-taxable
taxable or non-taxable: Marcella Morin took three clients to lunch on Wednesday and submitted the receipt to accounts payable with an expense claim
non-taxable
taxable or non-taxable: Frances Miles is given a credit card to buy gas for a personal car at Sunshine Fuels
taxable
Taxable or non-taxable: Due to late shipments, the employees who work in the shipping/receiving department are asked to work overtime every night for the next 4 weeks. The company reimburses the employees %15.00 each day for the cost of their dinners
non-taxable
taxable or non-taxable: Leslie Lafarge receives $0.68 per kilometre for the first 5000 business kilometres driven using a personal vehicle and $0.62 for each business kilometre after. No other compensation is paid for the use of the car.
non-taxable
which statutory deductions apply to taxable allowances?
taxable allowances are subject to withholding and reporting for CPP/QPP contributions, EI and QPI premiums, federal and provincial income taxes and Northwest Territories ad Nunavut payroll taxes.
What three conditions must be satisfied for a car allowance to be considered reasonable?
- the allowance is based solely on business kilometres driven in a calendar year
- the amount provided is based on the following government-prescribed reasonable guidelines:
- 0.68 per km for the first 5,000 business kilometres in the year
- 0.62 for each business kilometre after that - the employer does not reimburse the employee for expenses related to the same use of the vehicle
Player Flooring, located in Pointe-Claire, Québec, has a weekly pay period. France
Lavergne works in the shipping/receiving department, earns $18.50 per hour and works 40 regular hours per week. France works overtime every week; in this pay period, 4 hours of daily overtime were worked Monday through Thursday. The organization pays employees
1½ times their regular hourly rate for overtime hours worked and provided a $20.00 meal
allowance per day to employees who work overtime.
France has a claim code of 3 on the federal TD1 and a deduction code of C on the TP1015.3-V. Calculate France’s net pay.
regular wages: 18.50 x 40 = 740
overtime wages: 18.50 x 1.5 x 16 = 444
taxable meal allowance: 20 x 4 = 80
As France works overtime regularly, the meal allowance is considered taxable by the CRA and the RQ
What is the primary payroll compliance requirement concerning benefits?
that if they are taxable, both the federal and Quebec governments require that the value of the non-cash benefit or cash reimbursement amount is included in the employee’s income as it is earned or enjoyed, meaning on a pay period basis
What statutory deduction are calculated on a non-cash taxable benefit?
non-cash taxable benefits are subject to statutory deductions for CPP/QPP contributions, income tax and Northwest Territories/Nunavut payroll taxes
Which provinces impose a tax on insurance premiums?
The province of Manitoba assesses a Retail Sales Tax of 7% and Ontario assesses a retail Sales Tax of 8% on insurance premiums, the province of Quebec assesses a 9% tax on insurance premiums
taxable or non-taxable: Chemical dependency coverage under an employee assistance plan
non-taxable
taxable or non-taxable: Provincial health care taxes paid by an employer for their Ontario employees
non-taxable
taxable or non-taxable: Personal income tax preparation provided to senior management employees
taxable
taxable or non-taxable: Job placement counselling for an employee whose employment is being terminated
non-taxable
Indicate whether the following would be considered taxable or non-taxable, federally and in Québec. If the gift or award is considered taxable, give the taxable amount. Assume all costs include applicable taxes. - A $600 watch for a birthday gift
federally taxable - $100
Quebec taxable - $100
Indicate whether the following would be considered taxable or non-taxable, federally and in Québec. If the gift or award is considered taxable, give the taxable amount. Assume all costs include applicable taxes. - A $200 gift card to the Baby Boutique on the birth of a child
federally non-taxable
Quebec non-taxable
Indicate whether the following would be considered taxable or non-taxable, federally and in Québec. If the gift or award is considered taxable, give the taxable amount. Assume all costs include applicable taxes. - Three non-cash gifts for occasions worth $300, $150 and $100
federally taxable - $50
Quebec taxable - $50
Indicate whether the following would be considered taxable or non-taxable, federally and in Québec. If the gift or award is considered taxable, give the taxable amount. Assume all costs include applicable taxes. - A $400 camera for a 5-year service award
federally non-taxable
Quebec non-taxable
Indicate whether the following would be considered taxable or non-taxable, federally and in Québec. If the gift or award is considered taxable, give the taxable amount. Assume all costs include applicable taxes. - A $100 gift certificate from Jackson’s Jewellers as a performance reward
federally taxable - $100
Quebec taxable - $100
Provide two situations where employer-provided parking would not be considered a taxable benefit to the employee.
There is no parking taxable benefit in the following situations:
* when free or subsidized parking is provided to a physically disabled employee
* when there is a distinct and regular requirement for an employee to have a parking space as part of their employment activities, for example, if the employee is required to make regular daily calls to their customers. In the event of an audit, the employer must be prepared to justify that the value of the parking space is not a taxable benefit
* when an employer pays for parking costs incurred by an employee who is travelling away from the normal place of business. These are reimbursements of business-related expenses and are non-taxable
* when a business operates from a shopping centre or industrial park, where parking is available to employees and non-employees; the fair market value of parking, in this case, would be nil
* when an employer provides scramble parking (for example, there are significantly fewer spaces than there are employees and the spaces are available on a first-come-first-served basis)
Taxable or non-taxable: a Quebec employer provides Accidental Death and Dismemberment insurance for their employees
taxable
taxable or non-taxable: An Alberta employer provides private health insurance coverage for their employees
non-taxable
taxable or non-taxable: a British Columbia employer pays 50% of the cost of the employees group term life insurance coverage
taxable
taxable or non-taxable: a nova scotia employer offers and Employee Assistance Plan that covers their employees for alcohol dependency counselling services
non-taxable
taxable or non-taxable: Justin Lemaire is physically disabled; the company provides him with paid parking spot
non-taxable
taxable or non-taxable: National Merchandisers, with 23 payroll professionals across Canada, pays for these employees to take the Institute’s CPM certification courses
non-taxable
true or false: if an employer charges a loan interest rate that is higher than the government- prescribed rate, the employee has received a taxable benefit from employment
false. if an employer provides an employee with a loan and charges the employee the government- prescribed interest rate or higher, no taxable benefit is assessed.
The CPP is a contributory plan which means that all costs are covered by:
- revenue earned on CPP investments
- employee and employer contributions
- contributions made by self-employed workers
Which of the following is NOT subject to CPP contributions?
1. Raja receives a $250 bonus
2. George’s employment is terminated and he receives $2500 legislated wages in lieu of notice
3. Mary aged 64 is working part time
4. Geeta is 71 and receiving a monthly $500 CPP retirement pension
- Geeta is 71 and receiving a monthly $500 CPP retirement pension
An employee turned 70 on September 12, 2023. What is the employee’s maximum annual CPP contribution?
=2,815.83
Rehan started working for Allied Appliances on Feb 12, 2023. He turned 18 on August 15, 2023. When should his employer start deducting EI premiums?
from the first day he started working
John has $35.00 deducted from his pay for Employment Insurance premiums. His employer offers a short term disability plan and therefore has a reduced rate of 1.249. What would be the total amount that the employer would remit in Employment Insurance premiums?
= 78.72
35 x 1.249 + 35
A record of Employment is issued when there is an interruption of earnings of:
7 consecutive calendar days
Jean is paid $25.00 per hour, receives a car allowance of $75.00, and a non-cash taxable benefit of $25.00 every pay. During the current bi-weekly pay period Jean worked 80 hours and received a bonus of $700.00. What are Jean’s insurable earnings for this pay period?
= 2,775
25 x 80 + 75 +700
What is the purpose of the Employment Insurance Act?
provide assistance to workers who lose their jobs, or must be off work under other qualifies circumstances
An employee turns 18 on August 21, 2023. What is the maximum number of months of contributory earnings for CPP?
4 months
If an employee worked 44 hours in a week plus 3 hours of overtime paid at 1.5 times the regular hourly rate, how many insurable hours would they have worked?
47
Which types of payments are subject to CPP contributions?
1. taxable benefits
2. controlled tips
3. income from employment
4. all of the above
- all of the above
When calculating an employee’s CPP contribution for their net pay, contributory earnings are defined as
pensionable earnings minus the applicable exemption
Which of the following types of earnings are subject to CPP contributions?
1. tips that are controlled by the employer
2. paid sick leave
3. vacation pay
4. all of the above
- all of the above
Retirement pension, disability benefits and survivor benefits are all considered benefits under which of the following?
the Canada Pension Plan
Which of the following payments will subject to CPP contributions?
- a lump sum payment of accumulated sick leave credits owing to a deceased employee
- a lump sum death benefit payments to an employee’s surviving spouse
- a lump sum payment to an injured employee to cover living expenses while waiting for Workers’ Compensation benefits
- a lump sum severance payment paid with an employee’s final pay
a lump sum payment to an injured employee to cover living expenses while waiting for Workers’ Compensation benefits
If an employee’s EI premiums are $21.89 for a pay period, calculate the employer’s portion at the unreduced rate
= 30.65
21.89 x 1.4
An employee earns a fixed salary of $950.00 per week. They are expected to work 37.5 hours per week. During month-end they worked an extra 3 hours of paid overtime. How many insurable hours would be recorded?
40.5
An employee filed a CPT30 election with their employer on July 3rd. Calculate the maximum CPP contribution for 2023.
2190.09
3754.45 / 12 x 7
Calculate the employee portion of CPP contribution for Dan earning $3,600 per month
196.85
3600 - 291.66 x 5.95%
Calculate the employee portion of the CPP contribution for Asif earning $1800 per semi-monthly pay period.
98.42
1800 - 145.83 x 5.95%
