PAYROLL FUNDAMENTAL FINAL EVALUATION QUESTIONS
WITH ANSWERS 2025/2026 GRADED A+
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
Taxable Benefits - When an employer provides employees with items that are to the
employee's benefits, the CRA and RQ may determine that the benefit is taxable to the
employee
Taxable Benefit: Short-term and Long-term disability plans - There is no taxable benefit
Taxable Benefit: Fees paid to employee for employee assistance plan - Considered a
cash taxable benefit
Taxable Benefit: Fees paid directly to the provider for an employee assistance plan - not
considered a taxable benefit
Employee assistance plans - Make confidential counselling services available to
employees for physical or mental health counselling or family counselling
Taxable Benefit: Provincial health insurance plans - Not considered a taxable benefit
Taxable Benefit: Private health insurance plans (all provinces except Quebec) - Not
considered a taxable benefit
Taxable Benefit: Private health insurance plans (Quebec) - Considered a non-cash
taxable benefit
Taxable Benefit: Premiums paid for non-group plans (disability) - Considered a non-
cash taxable benefit
Taxable Benefit: Accidental death & dismemberment (AD&D) plans - Premiums are
considered a non-cash taxable benefit
Taxable Benefit: Group Term Life Insurance Plans - All premiums paid by the employer
are taxable
Registered Retirement Savings Plan (RRSP) contributions are non-taxable if: - - The
employee cannot withdraw the amounts from the group RRSP until they retire or cease
to be employed
WITH ANSWERS 2025/2026 GRADED A+
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
Taxable Benefits - When an employer provides employees with items that are to the
employee's benefits, the CRA and RQ may determine that the benefit is taxable to the
employee
Taxable Benefit: Short-term and Long-term disability plans - There is no taxable benefit
Taxable Benefit: Fees paid to employee for employee assistance plan - Considered a
cash taxable benefit
Taxable Benefit: Fees paid directly to the provider for an employee assistance plan - not
considered a taxable benefit
Employee assistance plans - Make confidential counselling services available to
employees for physical or mental health counselling or family counselling
Taxable Benefit: Provincial health insurance plans - Not considered a taxable benefit
Taxable Benefit: Private health insurance plans (all provinces except Quebec) - Not
considered a taxable benefit
Taxable Benefit: Private health insurance plans (Quebec) - Considered a non-cash
taxable benefit
Taxable Benefit: Premiums paid for non-group plans (disability) - Considered a non-
cash taxable benefit
Taxable Benefit: Accidental death & dismemberment (AD&D) plans - Premiums are
considered a non-cash taxable benefit
Taxable Benefit: Group Term Life Insurance Plans - All premiums paid by the employer
are taxable
Registered Retirement Savings Plan (RRSP) contributions are non-taxable if: - - The
employee cannot withdraw the amounts from the group RRSP until they retire or cease
to be employed
