Payroll Compliance Legislation Course
Midterm Chapter 1-4 Questions and
Answers
Question 1
When filing paper and electronic ROE (also its differences)
Correct Answer
Electronic ROE methods submitted to Service Canada:
ROE Web (upload) -> through payroll software
ROE Web (manual) -> type info online on Service Canada's site
Secure Automated Transfer (SAT) -> used by payroll companies for bulk upload
Paper ROE 3 part form: 3 copies
Copy 1 -> given to employee to submit to Service Canada to see if they file for EI
benefits.
Copy 2 -> sent to Service Canada
Copy 3 -> kept by employer for their records (for 6 years)
Question 2
Objective of the Payroll Function
Correct Answer
Pay employees accurately and on time, in compliance with legislative requirements
for a full annual payroll cycle
Page 1 of 44
,Question 3
Types of Employment NOT subject to EI premiums:
Correct Answer
- casual employment, if for the purpose other than the employer's usual trade or
business
- employment where the employer and employee are not dealing with each other at
arm's length
o this covers family connections
- employment by a corporation of a person who controls more than 40% of the
corporation's voting shares
- employment that constitutes an exchange of work or service
- employment of a member of a religious order who has taken a vow of perpetual
poverty and whose remuneration is paid either directly to the order or by the
member to that order
- employment of a person in a rescue operation, as long as that person is not
regularly employed by that employer
Question 4
EI premium reduction program
Correct Answer
Allows employers to pay EI premiums at a reduced rate if their employees are
covered by a short-term disability (STD) plan that meets certain requirements set by
Service Canada.
Question 5
Service Canada responsibilities
Correct Answer
Issuing and protecting the security of the SIN
Providing ROE services for employers
Administering EI benefits (regular, illness, parental, compassionate care, etc)
Administering the EI premium reduction program benefits
Administering CPP benefits (retirement, disability, survivor, child, death)
Administering seniors' benefits (OAS, GIS (Guaranteed Income Supplement)
Page 2 of 44
,Question 6
Under the CPP Act & the EI Act, the CRA is responsible for determining: (5)
Correct Answer
· whether or not an individual's employment is pensionable under the Canada
Pension Plan Actor insurable under the Employment Insurance Act
· the establishment of annual maximum pensionable earnings
· the types of earnings that are considered pensionable or insurable
· how many hours an insured person has in insurable employment
· the recovery of any debts owed as a result of overpayment of Employment
Insurance, Canada Pension or Old Age Security Benefits
Question 7
Internal Stakeholders (3)
Correct Answer
- employers
- employees
- other departments
Page 3 of 44
, Question 8
12 steps payment template
Correct Answer
Payroll Payment template 12 steps
Step 1: Gross Taxable Earnings (GTE)
Includes salary, commission, bonuses, taxable benefits, vacation pay
+ Non taxable items (like expense reimbursement) = Total Gross payments
Step 2: Pensionable Earnings (PE)
GTE + all taxable benefits (non-cash, near cash, deemed cash)
Used to calculate C/QPP
Step 3: Insurable Earnings (IE)
GTE + all deemed cash taxable benefits
Used to calculate EI/QPIP
Step 4: Net taxable Income (NTI - CRA)
GTE + all taxable benefits
Minus allowed deductions: Enhanced CPP, RRSP (employee + employer_. R{{, Union
dues, Prescribed zone amount, CRA-approved deductions
Step 5: NTI (RQ)
Same as CRA NTI, but used for Quebec income tax
Step 6: C/QPP contributions
1st: (PE - exemption) x C/QPP rate
2nd: PE x 2nd C/QPP rate
Step 7: EI premiums
EI = IE x EI rate
Step 8: QPIP premiums (Quebec only)
QPIP = IE x QPIP rate
Step 9: Federal + Provincial Tax (Not Quebec)
Based on CRA NTI
Use tax tables (like T4032)
Step 10: Quebec Income Tax
Based on RQ NTI
Use Quebec tax tables
Step 11: Total deductions
Includes: C/QPP + EI/QPIP + Income tax
Also: RPP, union dues, garnishments, etc
Step 12: Net Pay
Total gross payments - Total Deductions = Net pay
Page 4 of 44
Midterm Chapter 1-4 Questions and
Answers
Question 1
When filing paper and electronic ROE (also its differences)
Correct Answer
Electronic ROE methods submitted to Service Canada:
ROE Web (upload) -> through payroll software
ROE Web (manual) -> type info online on Service Canada's site
Secure Automated Transfer (SAT) -> used by payroll companies for bulk upload
Paper ROE 3 part form: 3 copies
Copy 1 -> given to employee to submit to Service Canada to see if they file for EI
benefits.
Copy 2 -> sent to Service Canada
Copy 3 -> kept by employer for their records (for 6 years)
Question 2
Objective of the Payroll Function
Correct Answer
Pay employees accurately and on time, in compliance with legislative requirements
for a full annual payroll cycle
Page 1 of 44
,Question 3
Types of Employment NOT subject to EI premiums:
Correct Answer
- casual employment, if for the purpose other than the employer's usual trade or
business
- employment where the employer and employee are not dealing with each other at
arm's length
o this covers family connections
- employment by a corporation of a person who controls more than 40% of the
corporation's voting shares
- employment that constitutes an exchange of work or service
- employment of a member of a religious order who has taken a vow of perpetual
poverty and whose remuneration is paid either directly to the order or by the
member to that order
- employment of a person in a rescue operation, as long as that person is not
regularly employed by that employer
Question 4
EI premium reduction program
Correct Answer
Allows employers to pay EI premiums at a reduced rate if their employees are
covered by a short-term disability (STD) plan that meets certain requirements set by
Service Canada.
Question 5
Service Canada responsibilities
Correct Answer
Issuing and protecting the security of the SIN
Providing ROE services for employers
Administering EI benefits (regular, illness, parental, compassionate care, etc)
Administering the EI premium reduction program benefits
Administering CPP benefits (retirement, disability, survivor, child, death)
Administering seniors' benefits (OAS, GIS (Guaranteed Income Supplement)
Page 2 of 44
,Question 6
Under the CPP Act & the EI Act, the CRA is responsible for determining: (5)
Correct Answer
· whether or not an individual's employment is pensionable under the Canada
Pension Plan Actor insurable under the Employment Insurance Act
· the establishment of annual maximum pensionable earnings
· the types of earnings that are considered pensionable or insurable
· how many hours an insured person has in insurable employment
· the recovery of any debts owed as a result of overpayment of Employment
Insurance, Canada Pension or Old Age Security Benefits
Question 7
Internal Stakeholders (3)
Correct Answer
- employers
- employees
- other departments
Page 3 of 44
, Question 8
12 steps payment template
Correct Answer
Payroll Payment template 12 steps
Step 1: Gross Taxable Earnings (GTE)
Includes salary, commission, bonuses, taxable benefits, vacation pay
+ Non taxable items (like expense reimbursement) = Total Gross payments
Step 2: Pensionable Earnings (PE)
GTE + all taxable benefits (non-cash, near cash, deemed cash)
Used to calculate C/QPP
Step 3: Insurable Earnings (IE)
GTE + all deemed cash taxable benefits
Used to calculate EI/QPIP
Step 4: Net taxable Income (NTI - CRA)
GTE + all taxable benefits
Minus allowed deductions: Enhanced CPP, RRSP (employee + employer_. R{{, Union
dues, Prescribed zone amount, CRA-approved deductions
Step 5: NTI (RQ)
Same as CRA NTI, but used for Quebec income tax
Step 6: C/QPP contributions
1st: (PE - exemption) x C/QPP rate
2nd: PE x 2nd C/QPP rate
Step 7: EI premiums
EI = IE x EI rate
Step 8: QPIP premiums (Quebec only)
QPIP = IE x QPIP rate
Step 9: Federal + Provincial Tax (Not Quebec)
Based on CRA NTI
Use tax tables (like T4032)
Step 10: Quebec Income Tax
Based on RQ NTI
Use Quebec tax tables
Step 11: Total deductions
Includes: C/QPP + EI/QPIP + Income tax
Also: RPP, union dues, garnishments, etc
Step 12: Net Pay
Total gross payments - Total Deductions = Net pay
Page 4 of 44
