Chapter 6 Flashcards
NEW EMPLOYEES:
Commencement Process
Many companies have a commencement process in place to welcome new employees to the organization
This process usually contains information about the work environment, payroll, benefits, culture, history, the organizational chart and anything else relevant to working in the new organization
The documents contained in the package are typically a combination of:
organization-specific forms, such as personal information forms
government forms, such as the federal and provincial/territorial Personal Tax Credits Return – TD1
benefit forms, such as insurance enrollment forms
Personal Information Form
Name/Address
Date of Birth – for CPP
SIN – for reporting to CRA
Personal exemptions – TD1 and provincial TD1
Rates of pay – OT, shift premium, vacation, etc
Allowances to be paid
Deductions – court, CRA, retirement plans, union dues, medical premiums, life insurance premiums, charities, social clubs, etc
Additional Information needed for payroll
Pay cycle information
If hourly - # of hours worked, including approved overtime, shift information, holiday time worked
If salary, any changes to normal work schedule
Any vacation time taken (if accrued)
Time taken - paid or unpaid (type of leave)
Any Allowances paid
Any non-cash earnings such as gifts
Layoff or termination information(if applicable)
Any taxable benefits – cash or non-cash
Difference between cash and non-cash taxable benefits
Cash taxable benefits are added to an employee’s earnings and are part of the their take home pay, whereas a non-cash taxable benefit is only a value added to the employee’s pay for the purpose of calculating CPP and income tax deductions.
EI premiums do not include non-cash taxable allowances or non-cash taxable benefits.
Benefit Enrolment Forms
organizations that offer benefits, such as group insurance or registered pension plans, will include enrollment forms for these plans in the commencement package
Union Membership Application
in workplaces with a collective agreement in place, employees covered by the agreement are required to pay union dues
the new employee will be required to sign a union membership form or application, included in the commencement package, authorizing the deduction
Confidentiality Agreement
a legally enforceable agreement preventing present or past employees from disclosing commercially sensitive information belonging to the employer to any other party
Calculation of Net Pay
- Gather all information for the payroll processing.
Static information for employee
Pay Cycle specific data for employee - Calculate taxable benefit amounts needed for calculation of pensionable and insurable earnings and taxable income
- Calculate Gross Earnings.
Wages/salaries, taxable allowances, non-taxable allowances, vacation pay - Calculate Pensionable Earnings:
Gross Earnings
less non-taxable allowances
plus taxable benefits - Calculate Insurable Earnings:
Gross Earnings
less non-taxable allowances - Calculate Canada Pension Plan Contributions
Pensionable Earnings
less pay cycle exemption
times 4.95% - Calculate Employment Insurance Premiums
Insurable Earnings times 1.88%. - Calculate Gross Taxable Earnings
Gross Earnings less non-taxable allowances plus taxable benefits - Calculate Net Taxable Earnings
Gross Taxable Earnings
less:- Employees deductions for Registered Pension Plan,
- Registered Retirement Savings Plans,
- Union dues
- Other Canada Revenue Agency approved amounts
- Employees deductions for Registered Pension Plan,
- Calculate Federal Income Tax from tables or PDOC
- Calculate Provincial Income Tax from tables or PDOC.
- Calculate Total deductions.
- Calculate Net Pay.