Payroll Compliance Legislation Course Midterm Exam Actual
Questions and Answers 2026/2027
1. Canada Revenue Agency — Payroll Responsibilities
Which organization is primarily responsible for administering federal income-tax
requirements related to payroll in Canada?
A. Canada Revenue Agency (CRA)
B. Service Canada
C. Statistics Canada
D. Canada Border Services Agency
Correct Answer: A. Canada Revenue Agency (CRA)
Rationale: The CRA administers federal income-tax requirements, including employer
obligations for payroll deductions, remittances, and reporting.
2. Employee vs. Self-Employed Worker
Why is determining whether a worker is an employee or self-employed important to payroll?
A. It determines payroll and statutory obligations
B. It determines the employee's vacation destination
C. It eliminates the need for payroll records
,D. It determines the employee's job title
Correct Answer: A. It determines payroll and statutory obligations
Rationale: Worker classification affects deductions, contributions, reporting, and other
employer obligations. The course specifically requires students to determine worker status.
3. Employment Insurance
Which program provides temporary financial assistance to eligible individuals who lose
employment through circumstances recognized by the program?
A. Employment Insurance (EI)
B. Canada Pension Plan (CPP)
C. Workers' compensation
D. Old Age Security
Correct Answer: A. Employment Insurance (EI)
Rationale: EI provides benefits to eligible individuals in situations such as qualifying
unemployment, subject to program requirements.
4. Canada Pension Plan
What is the primary purpose of CPP contributions deducted from eligible employees?
A. To contribute toward CPP benefits
,B. To pay provincial sales tax
C. To fund an employer's vacation program
D. To replace income-tax deductions
Correct Answer: A. To contribute toward CPP benefits
Rationale: CPP contributions help fund benefits provided under the Canada Pension Plan.
Payroll must correctly calculate and remit required contributions.
5. Payroll Deductions
Which statement best describes a statutory payroll deduction?
A. A deduction required by legislation
B. A deduction selected solely for convenience
C. A deduction chosen by a coworker
D. A deduction that never needs to be remitted
Correct Answer: A. A deduction required by legislation
Rationale: Statutory deductions arise from legal requirements. Payroll professionals must
calculate, withhold, and remit them correctly.
6. Employer Responsibilities
An employer withholds required payroll deductions from an employee's pay. What must the
employer generally do with those amounts?
, A. Remit them to the appropriate authority within the required timeframe
B. Keep them permanently as company revenue
C. Give them to another employee
D. Add them to the employee's vacation balance
Correct Answer: A. Remit them to the appropriate authority within the required timeframe
Rationale: Employers act as withholding agents for required deductions and must remit
amounts according to applicable legislation and deadlines.
7. Payroll Records
Why should payroll records be maintained accurately?
A. To demonstrate compliance and support payroll calculations and reporting
B. To avoid paying employees
C. To eliminate the need for statutory reporting
D. To replace employment contracts
Correct Answer: A. To demonstrate compliance and support payroll calculations and reporting
Rationale: Accurate records provide evidence of payroll calculations, deductions, remittances,
and compliance.
8. Privacy — Employee Information
Questions and Answers 2026/2027
1. Canada Revenue Agency — Payroll Responsibilities
Which organization is primarily responsible for administering federal income-tax
requirements related to payroll in Canada?
A. Canada Revenue Agency (CRA)
B. Service Canada
C. Statistics Canada
D. Canada Border Services Agency
Correct Answer: A. Canada Revenue Agency (CRA)
Rationale: The CRA administers federal income-tax requirements, including employer
obligations for payroll deductions, remittances, and reporting.
2. Employee vs. Self-Employed Worker
Why is determining whether a worker is an employee or self-employed important to payroll?
A. It determines payroll and statutory obligations
B. It determines the employee's vacation destination
C. It eliminates the need for payroll records
,D. It determines the employee's job title
Correct Answer: A. It determines payroll and statutory obligations
Rationale: Worker classification affects deductions, contributions, reporting, and other
employer obligations. The course specifically requires students to determine worker status.
3. Employment Insurance
Which program provides temporary financial assistance to eligible individuals who lose
employment through circumstances recognized by the program?
A. Employment Insurance (EI)
B. Canada Pension Plan (CPP)
C. Workers' compensation
D. Old Age Security
Correct Answer: A. Employment Insurance (EI)
Rationale: EI provides benefits to eligible individuals in situations such as qualifying
unemployment, subject to program requirements.
4. Canada Pension Plan
What is the primary purpose of CPP contributions deducted from eligible employees?
A. To contribute toward CPP benefits
,B. To pay provincial sales tax
C. To fund an employer's vacation program
D. To replace income-tax deductions
Correct Answer: A. To contribute toward CPP benefits
Rationale: CPP contributions help fund benefits provided under the Canada Pension Plan.
Payroll must correctly calculate and remit required contributions.
5. Payroll Deductions
Which statement best describes a statutory payroll deduction?
A. A deduction required by legislation
B. A deduction selected solely for convenience
C. A deduction chosen by a coworker
D. A deduction that never needs to be remitted
Correct Answer: A. A deduction required by legislation
Rationale: Statutory deductions arise from legal requirements. Payroll professionals must
calculate, withhold, and remit them correctly.
6. Employer Responsibilities
An employer withholds required payroll deductions from an employee's pay. What must the
employer generally do with those amounts?
, A. Remit them to the appropriate authority within the required timeframe
B. Keep them permanently as company revenue
C. Give them to another employee
D. Add them to the employee's vacation balance
Correct Answer: A. Remit them to the appropriate authority within the required timeframe
Rationale: Employers act as withholding agents for required deductions and must remit
amounts according to applicable legislation and deadlines.
7. Payroll Records
Why should payroll records be maintained accurately?
A. To demonstrate compliance and support payroll calculations and reporting
B. To avoid paying employees
C. To eliminate the need for statutory reporting
D. To replace employment contracts
Correct Answer: A. To demonstrate compliance and support payroll calculations and reporting
Rationale: Accurate records provide evidence of payroll calculations, deductions, remittances,
and compliance.
8. Privacy — Employee Information
