Deck 6: Payroll and Benefits: Common Misconceptions and Calculation Methods

Question 1

If employees receive benefits that are not paid in cash, such as free cell phones, these items will not be considered taxable.

Answer 1

False

Question 2

Pensionable Earnings may be different from Insurable Earnings.

Answer 2

True

Question 3

Employees in provinces other than Quebec must contribute additional premiums on insurable earnings over and above the Employment Insurance rate of 1.88% for their provincial Parental Insurance Plans.

Answer 3

False

Question 4

The rate of 1.88% for Employment Insurance Premiums will never change.

Question 5

Current information should always be used for payroll calculations and the latest rates can be found on government websites.

Question 6

If an employer pays $200 per month for employee life insurance premiums, what amount must be added to gross earnings on a weekly pay period before calculating deductions?

A) $46.15
B) $2,400
C) $50
D) $200
E) $100

Question 7

Employees in Quebec contribute to the Quebec Pension Plan at a rate of ----------.

A) 4.95%
B) 1.54%
C) 1.88%
D) 0.559%
E) 5.25%

Question 8

Employees in Quebec contribute Employment Insurance premiums at a rate of________.

A) 5.25%
B) 1.54%
C) 4.95%
D) 1.88%
E) 0.559%

Question 9

Employees in Quebec must also contribute an additional premium of----------on insurable earnings to the Quebec Parental Insurance Plan.

A) 0.559%
B) 4.95%
C) 1.54%
D) 5.25%
E) 1.88%

Question 10

The value of taxable benefits provided to employees must be added to income _______in advance of calculating deductions.

A) each day
B) at tax filing
C) each pay cycle
D) annually
E) monthly

Question 11

Gross Earnings includes all but the following:

A) Shift Premium
B) Taxable Allowances
C) Payment in lieu of notice
D) Non-taxable allowances
E) Employer Health Tax Premiums

Question 12

Why do we need the employee's date of birth in order to calculate pay?

A) To determine if provincial tax deductions are required
B) To determine birthday deductions are required
C) To determine if Canada Pension plan deductions are required
D) To determine if Employment Insurance deductions are required
E) To determine if federal tax deductions are required

Question 13

All but the following are deductions allowed in the calculation of Net Taxable Earnings

A) Contributions to a Registered Retirement Savings Plan
B) Amounts claimed on a TD1 for living in a prescribed zone
C) Contributions to a Registered Charity
D) Union dues deducted from this pay cycle
E) Contributions to a Registered Pension Plan

Question 14

List the 13 steps in the Pay Cycle Process.

Question 15

Explain the difference between Gross Taxable Earnings and Net Taxable Earnings.

Question 16

When would Pensionable Earnings and Insurable Earnings be different? Provide an example.

Question 17

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-Calculate the Gross Earnings.

Question 18

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-Calculate the Pensionable Earnings.

Question 19

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-Calculate the Insurable Earnings.

Question 20

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-The employee is 32 years old and has contributed $1,212.15 to Canada Pension Plan so far this year. Calculate the Canada Pension Plan Contribution.

Question 21

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-The employee is 32 years old and has contributed $460.37 to Employment Insurance so far this year. Calculate the Employment Insurance Premium.

Question 22

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-Calculate the Gross Taxable Earnings.

Question 23

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-Calculate the Net Taxable Earnings. Explain what deductions are allowed.

Question 24

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.
-The employee is a Claim Code 1 both Federally and Provincially and works in Ontario. Use the PDOC to calculate Provincial and Federal tax deductions assuming the date of pay is March 7, 2015.

Question 25

An employee earns $55,000 per year and is paid on a semi-monthly pay schedule. The employee enjoys the benefit of a company paid cell phone for personal use (cost is $150 per month) and receives 6% vacation pay on each payment. This pay cycle included 15 hours of approved overtime worked over the normal 40 hour work week and a reimbursement for travel expenses in the amount of $434.20. The employee contributes 5% of their regular wages to a Registered Retirement Savings Plan each pay cycle.

-Calculate the net pay for this employee. Be sure to list all of the deductions from the employee's pay for this pay cycle. (Note: if you do not have access to the PDOC assume Federal Tax deduction = $424.69 and Provincial Tax deduction =$199.30)