Payroll Fundamentals 1 Exam Questions and Answers Latest Update 2025

Payroll Fundamentals 1 Exam Questions and Answers Latest Update 2025 RQ and CRA define a car allowance as reasonable if: - Answers - The allowance is based solely on business kilometres driven in a calendar year - the amount provided is based on the following government-prescribed reasonable guidelines - $0.58 per km for the first 5,000 business km's in the year ($0,62 in the Yukon, NWT & Nunavut) - $0.51 thereafter ($0.56 for YK, NWT, NT) - the employer does not reimburse the employee for expenses related to the same use of the vehicle Personal Driving includes: - Answers - vacation travel - driving to conduct personal business - travel between home and work, even if the employer insists the employee drive the vehicle home Business driving includes: - Answers - driving to existing and prospective clients, points of call, and other office locations of the employer - when an employee travels directly from home to a point of call, which is not the employer's place of business where the employee regularly reports for work - when the employees travels home directly from a point of call Availability (automobiles) - Answers The number of thirty-day periods that the automobile is available to the employee for the current taxation year. The employee has access to or control over the vehicle. Automobile - Answers A motor vehicle that is designed or adapted to primarily carry individuals on highways and streets, and has seating capacity of not more than the driver and eight passengers If a gift or award is given to an employee in cash - Answers The amount is considered pensionable, insurable and taxable to the employee, subject to all statutory deductions Overtime meal allowance is considered non-taxable if (RQ): - Answers - overtime is done at the employer's request and is expected to last for at least two consecutive hours - overtime is done rarely or on an occasional basis - the meal expenses are reimbursed upon presentation of receipts - the meal expenses reimbursed or the value of the meal provided is reasonable The four categories of employment income - Answers - Earnings - Allowances - Benefits - Taxable expense reimbursement Earnings - Answers Dollar amounts the employer pays an employee for the work they perform Types of earnings - Answers - a salary - a rate for each hour worked - a rate per piece of goods produced or picked - a disability payment for time off work due to illness - a payment for vacation time - a premium payment for overtime hours worked - a premium payment for hours worked on shift Allowances - Answers Additional dollar amounts paid to employees for the use, or anticipated use, of their personal property for business purposes Benefits - Answers Dollar values attributed to something the employer has either provided to an employee or paid for on an employee's behalf Expense Reimbursements - Answers Dollar amounts paid to employees to cover expenses that they incur while performing their job. Regular payments - Answers Have an established frequency, such as weekly-paid salary or wages Non-regular payments - Answers payments that do not occur each pay period, for example, a bonus or a retroactive adjustment Salary - Answers A fixed amount of money paid to an employee for each pay period. Salary per pay period - Answers Annual salary / number of pay periods per year Wages - Answers Earnings which are based on the amount of time worked, usually at a rate per hour or per day Regular earnings - Answers Hourly rate x pay period regular hours worked Piecework - Answers A rate of pay earned per unit of production, regardless of the length of time taken Self-Insured Disability - Answers Employers often offer disability coverage that provides their employees with income in the event of absence due to illness or injury Sick Pay - Answers 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 - Answers 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 - Answers Informal, unwritten plans exist in organizations that have no formal policy for sick leave. Wage-loss replacement plans (WLRP) - Answers 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 - Answers 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 - Answers 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 - Answers The amount paid to an employee while off work on vacation leave Overtime - Answers Time worked beyond the normal work day or work week Shift Premiums - Answers 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): - Answers - 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 - Answers 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