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| Section | Objectives |
|---|---|
| Payroll Fundamentals and Compliance Framework | - Payroll legislation and regulatory bodies
|
| Earnings, Deductions, and Taxation | - Types of earnings
|
| Payroll Records and Compliance Reporting | - Government reporting
|
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NEW QUESTION # 74
Which of the following types of earnings are not considered income from employment?
Answer: B
Explanation:
Regular salary, vacation pay, and commissions are generally treated as income from employment because they are amounts paid for services performed during employment. In contrast, what many people call
"severance pay" is often classified by the CRA as a retiring allowance-an amount paid when or after an employee retires or loses their job, in recognition of long service or for the loss of employment.
This distinction matters in payroll because a retiring allowance has its own rules for withholding and potential RRSP/RPP transfer eligibility, and it is not treated the same way as normal employment income earned while actively employed. CRA technical guidance also draws lines between amounts that are employment income versus retiring allowance depending on the nature/timing of the payment.
So, among the options listed, severance pay (when it is a retiring allowance) is the one that is not considered income from employment in the way salary/vacation pay/commissions are.
NEW QUESTION # 75
An employee has the use of a company-leased vehicle for both business and personal use. This is an example of:
Answer: D
Explanation:
This is a benefit because the employer is providing access to an automobile (leased by the employer) that the employee can use for personal driving as well as business. The CRA explains that when an employer-owned or employer-leased automobile is made available for personal use, the employee receives a taxable automobile benefit, generally made up of a standby charge (availability of the vehicle) and potentially an operating expense benefit (if the employer pays operating costs and the employee has personal kilometres).
It is not an allowance (which is typically a cash amount given to the employee), and it is not an expense reimbursement (repayment of employee-incurred business expenses). It is also not an earning (pay for work performed). Payroll's role is to track availability days/months, business vs personal kilometres, any employee reimbursements, apply the CRA calculation methods, and report the taxable benefit on the employee's information slip with the correct taxable benefit treatment.
NEW QUESTION # 76
Ursula is 17 years old, works in Quebec and earns $750.00 weekly. Ursula pays weekly union dues of $18.00 along with a special weekly union assessment of $10.00 for construction of a new union hall for its members.
Ursula also has registered pension plan (RPP) contributions of $20.00 deducted from each pay. Calculate Ursula's net federal taxable income.
Answer:
Explanation:
$712.00
Explanation:
For payroll income tax purposes, net taxable income starts with the employee's gross taxable income and then subtracts only those deductions that are deductible for income tax and can be recognized at source. CRA payroll guidance shows this approach by subtracting items such as RPP contributions and union dues when determining net taxable income for calculating income tax deductions.
Gross taxable income (weekly): $750.00.
RPP contributions are deductible (the amounts reported from box 20 of the T4 are generally deductible).
Regular union dues are deductible; however, the CRA states that deductible annual union/professional dues do not include special assessments or charges for anything other than ordinary operating costs. A levy specifically for constructing a new union hall is a special assessment, so it is not deductible as union dues.
So the deductions that reduce federal taxable income here are: $18.00 (union dues) + $20.00 (RPP) = $38.00.
Net federal taxable income = $750.00 # $38.00 = $712.00.
NEW QUESTION # 77
Phillip is being paid a severance payment with his final pay. Which block should this payment be reported on the Record of Employment?
Answer: C
Explanation:
On the ROE, separation payments are reported in Block 17. Service Canada explains that Block 17C - Other monies is used to record "any other payments or benefits...paid...because of the separation," whether or not they are insurable.
The ROE Guide specifically lists "Severance pay" as a type of separation money to enter in Block 17C ("Enter 'Severance pay' and the amount").
Crucially, Block 15B and Block 15C are for insurable earnings totals/by pay period. The ROE Guide notes that some amounts reported in Block 17 (like vacation pay) are insurable and must be added into Blocks 15B
/15C; however, retirement leave credits/retiring allowances (a form of severance-type payment) are not insurable and are not added to Blocks 15B/15C even though they are recorded in Block 17C.
So, severance is reported in Block 17C only.
NEW QUESTION # 78
When would a Record of Employment be issued for an employee paid mainly by commission?
Answer: D
Explanation:
Commission employees have a specific ROE rule. Service Canada's ROE Guide explains that for employees whose earnings consist mainly of commissions, an interruption of earnings occurs only when the employment contract is terminated-unless the employee stops working due to specified EI-related reasons such as illness
/injury/quarantine, maternity/pregnancy, parental leave, or compassionate care/family caregiver leaves.
This means the usual 7-day rule (7 consecutive days with no work and no insurable earnings) generally does not trigger an interruption of earnings for mainly-commission employees as long as the contract continues. In other words, if the employee stops working for reasons like vacation or a leave of absence but remains under contract, Service Canada indicates there is no interruption of earnings and therefore no ROE is issued just because of time without commissions/work.
So the correct choice is when the employment relationship/contract is terminated (option C).
NEW QUESTION # 79
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