PAYROLL FUNDAMENTALS UPDATED MAIN
EXAMINATION SET QUESTIONS AND SOLUTIONS
RATED A+
✔✔Non-regular payments - ✔✔payments that do not occur each pay period, for
example, a bonus or a retroactive adjustment
✔✔Salary - ✔✔A fixed amount of money paid to an employee for each pay period.
✔✔Salary per pay period - ✔✔Annual salary / number of pay periods per year
✔✔Wages - ✔✔Earnings which are based on the amount of time worked, usually at a
rate per hour or per day
✔✔Regular earnings - ✔✔Hourly rate x pay period regular hours worked
✔✔Piecework - ✔✔A rate of pay earned per unit of production, regardless of the length
of time taken
✔✔Self-Insured Disability - ✔✔Employers often offer disability coverage that provides
their employees with income in the event of absence due to illness or injury
✔✔Sick Pay - ✔✔An amount paid to an employee who is absent from work due to
illness or injury. Paid sick leave is only legislated in two provinces, PEI and Quebec.
With the other provinces paid sick leave is up to the employer.
✔✔Formal Plans - ✔✔A plan structured to balance both the needs of the employee and
the employer. Formal plans will outline provisions for the amount of sick leave, and
whether the leave can be carried over to a following year.
✔✔Informal plans - ✔✔Informal, unwritten plans exist in organizations that have no
formal policy for sick leave.
✔✔Wage-loss replacement plans (WLRP) - ✔✔An agreement between an employer
and employees, or between an employer and a group or association of employees,
under which the employees are compensated with payment on a periodic basis or the
loss of employment income as a result of sickness, disability, maternity, or injury.
✔✔Short-term disability plans - ✔✔Plans that provide pay to an employee when he or
she is unable to work because of a non-work-related illness or injury
✔✔Long-term disability plans - ✔✔Plans that provide disability income to employees
who have exhausted their short-term disability coverage and are still unable to return to
full-time employment
, ✔✔Vacation Pay - ✔✔The amount paid to an employee while off work on vacation
leave
✔✔Overtime - ✔✔Time worked beyond the normal work day or work week
✔✔Shift Premiums - ✔✔Additional amounts paid over and above an employee's normal
salary or hourly rate for working on an evening or midnight shift
✔✔Overtime meal allowance is considered non-taxable if (CRA): - ✔✔- the cost of the
meal is reasonable (up to $17)
- the employee must work two or more hours of overtime before or after their scheduled
hours of work
- the overtime is infrequent and occasional in nature and occurs usually less than three
times a week
✔✔Meal allowance - ✔✔An amount paid or reimbursed to an employee that is intended
to cover the cost of a missed meal due to working overtime or meal expenses incurred
while on employer business
✔✔Tax on unreasonable car allowances - ✔✔Included in an employee's income and
subject to statutory deductions
✔✔Tax on reasonable car allowances - ✔✔Reasonable car allowances are non-taxable
and excluded from income
✔✔Car allowances can be provided as: - ✔✔- Flat amount
- Fixed amount per business kilometer driven
- Credit card or reimbursement for gas purchases
✔✔Car Allowance - ✔✔An amount paid or reimbursed to an employee who uses their
personal automobile for business
✔✔Cash taxable benefits - ✔✔Subject to all statutory withholdings
✔✔Non-Cash taxable benefits - ✔✔Subject to all statutory withholdings, except for EI
and QPIP premiums
✔✔If the employer reimburses employees for money they paid for the benefit - ✔✔The
reimbursement is included in the employee's income as a cash taxable benefit
✔✔If the employer pays a taxable benefit to a third party - ✔✔The value is included in
the employee's income as a non-cash taxable benefit
EXAMINATION SET QUESTIONS AND SOLUTIONS
RATED A+
✔✔Non-regular payments - ✔✔payments that do not occur each pay period, for
example, a bonus or a retroactive adjustment
✔✔Salary - ✔✔A fixed amount of money paid to an employee for each pay period.
✔✔Salary per pay period - ✔✔Annual salary / number of pay periods per year
✔✔Wages - ✔✔Earnings which are based on the amount of time worked, usually at a
rate per hour or per day
✔✔Regular earnings - ✔✔Hourly rate x pay period regular hours worked
✔✔Piecework - ✔✔A rate of pay earned per unit of production, regardless of the length
of time taken
✔✔Self-Insured Disability - ✔✔Employers often offer disability coverage that provides
their employees with income in the event of absence due to illness or injury
✔✔Sick Pay - ✔✔An amount paid to an employee who is absent from work due to
illness or injury. Paid sick leave is only legislated in two provinces, PEI and Quebec.
With the other provinces paid sick leave is up to the employer.
✔✔Formal Plans - ✔✔A plan structured to balance both the needs of the employee and
the employer. Formal plans will outline provisions for the amount of sick leave, and
whether the leave can be carried over to a following year.
✔✔Informal plans - ✔✔Informal, unwritten plans exist in organizations that have no
formal policy for sick leave.
✔✔Wage-loss replacement plans (WLRP) - ✔✔An agreement between an employer
and employees, or between an employer and a group or association of employees,
under which the employees are compensated with payment on a periodic basis or the
loss of employment income as a result of sickness, disability, maternity, or injury.
✔✔Short-term disability plans - ✔✔Plans that provide pay to an employee when he or
she is unable to work because of a non-work-related illness or injury
✔✔Long-term disability plans - ✔✔Plans that provide disability income to employees
who have exhausted their short-term disability coverage and are still unable to return to
full-time employment
, ✔✔Vacation Pay - ✔✔The amount paid to an employee while off work on vacation
leave
✔✔Overtime - ✔✔Time worked beyond the normal work day or work week
✔✔Shift Premiums - ✔✔Additional amounts paid over and above an employee's normal
salary or hourly rate for working on an evening or midnight shift
✔✔Overtime meal allowance is considered non-taxable if (CRA): - ✔✔- the cost of the
meal is reasonable (up to $17)
- the employee must work two or more hours of overtime before or after their scheduled
hours of work
- the overtime is infrequent and occasional in nature and occurs usually less than three
times a week
✔✔Meal allowance - ✔✔An amount paid or reimbursed to an employee that is intended
to cover the cost of a missed meal due to working overtime or meal expenses incurred
while on employer business
✔✔Tax on unreasonable car allowances - ✔✔Included in an employee's income and
subject to statutory deductions
✔✔Tax on reasonable car allowances - ✔✔Reasonable car allowances are non-taxable
and excluded from income
✔✔Car allowances can be provided as: - ✔✔- Flat amount
- Fixed amount per business kilometer driven
- Credit card or reimbursement for gas purchases
✔✔Car Allowance - ✔✔An amount paid or reimbursed to an employee who uses their
personal automobile for business
✔✔Cash taxable benefits - ✔✔Subject to all statutory withholdings
✔✔Non-Cash taxable benefits - ✔✔Subject to all statutory withholdings, except for EI
and QPIP premiums
✔✔If the employer reimburses employees for money they paid for the benefit - ✔✔The
reimbursement is included in the employee's income as a cash taxable benefit
✔✔If the employer pays a taxable benefit to a third party - ✔✔The value is included in
the employee's income as a non-cash taxable benefit
