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| Section | Objectives |
|---|---|
| Topic 1: Earnings, Deductions, and Taxation | - Types of earnings
|
| Topic 2: Payroll Records and Compliance Reporting | - Recordkeeping requirements
|
| Topic 3: Payroll Fundamentals and Compliance Framework | - Payroll system overview in Canada
|
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NEW QUESTION # 21
Rosa joined Avion Electronics in April 1983. Her employment was terminated on November 30, 2015 and she was paid a $62,500.00 retiring allowance. Rosa joined her company's pension plan in 1986 and was fully vested on termination of employment. Calculate the non-eligible portion of the retiring allowance.
Answer:
Explanation:
$32,000.00 non-eligible portion
Explanation:
CRA requires separating a retiring allowance into an eligible and non-eligible portion. The eligible portion is the maximum that can be transferred to an RRSP/RPP under the special rules (without using regular RRSP room). The formula is: $2,000 for each year (or part-year) of service before 1996, plus an additional $1,500 for each year (or part-year) before 1989 in which the employee had no employer pension/DPSP benefit vested at the time of payment (or previously paid).
Rosa worked from 1983 to 1995 (inclusive) for pre-1996 service: 13 years × $2,000 = $26,000.
For the extra pre-1989 amount: she joined the pension plan in 1986 and was fully vested when paid the retiring allowance in 2015, so 1986-1988 do not qualify for the extra $1,500. However, 1983-1985 were years before 1989 when she had no vested employer pension benefit, so 3 years × $1,500 = $4,500.
Eligible portion = $26,000 + $4,500 = $30,500.
Non-eligible portion = $62,500 # $30,500 = $32,000.
NEW QUESTION # 22
What is piecework?
Answer: D
Explanation:
Piecework (also called piece-rate pay) is a pay method where an employee's earnings are determined by output-they are paid a set amount per unit produced or completed, rather than by hours worked or a fixed salary. This aligns directly with option C. A time-based hourly/daily wage (option A) is a different earnings method, and a fixed pay-per-period arrangement (option B) describes salary. Therefore, "all of the above" is incorrect because these are three distinct compensation structures.
In payroll calculations, piecework earnings are typically calculated as: piece rate × number of units produced in the pay period. Employers still have to ensure compliance with employment standards, such as minimum wage and overtime rules, even where piecework is used. A Canadian payroll educational reference defines piecework as payment for each unit produced "regardless of the amount of time taken."
NEW QUESTION # 23
Which pension plan requires the services of an actuary to study and forecast future needs of the plan to ensure the plan remains sufficiently funded to provide employees with their retirement benefits?
Answer: D
Explanation:
A defined benefit (DB) pension plan promises a future pension benefit based on a formula (for example, service and earnings). Because the benefit is defined, the plan must ensure it is adequately funded to meet future liabilities. That requires actuarial valuations-professional studies that forecast future obligations and determine required contributions. Regulators describe DB plan funding as being based on actuarial calculations and require administrators to file actuarial valuation reports to establish funding and contribution requirements.
A defined contribution (DC) plan does not promise a specific future pension amount; contributions are defined, and the retirement outcome depends on investment performance-so it does not require the same ongoing actuarial funding valuations for promised liabilities. An RRSP is an individual savings plan, not an employer DB plan requiring actuarial funding reports.
Therefore, the correct answer is Defined benefit pension plan (option A).
NEW QUESTION # 24
Which of the following situations would not require an employer to issue a Record of Employment?
Answer: D
Explanation:
An ROE is required when an employee experiences an interruption of earnings, such as 7 consecutive calendar days with no work and no insurable earnings (the "7-day rule"), or when earnings fall below 60% of regular weekly earnings for specific reasons (the "60% rule"). That means a 6-week unpaid leave (A) typically triggers an interruption of earnings, and a drop to 40% of normal earnings (B) meets the "below
60%" threshold (when due to the listed leave reasons). A layoff with no recall (D) also triggers an interruption of earnings under the 7-day rule.
However, Service Canada lists a special situation for a change in ownership: the former employer does not have to issue ROEs if (1) there is no actual break in the employee receiving earnings, and (2) payroll records are available to the new owner and the new owner agrees to issue a single ROE covering both periods if needed. That is exactly option C, so no ROE is required in that scenario.
NEW QUESTION # 25
By the authority of which Act can the Canada Revenue Agency garnish the wages of an employee who has failed to pay Employment Insurance premiums, Canada Pension Plan contributions, or income tax deductions?
Answer: D
Explanation:
The CRA's wage garnishment tool is commonly issued as a Requirement to Pay (RTP) (and related instruments such as ERTP/DTP), which directs a third party (often the employer) to redirect amounts that would otherwise be paid to the employee, and send them to the government instead. CRA guidance explains that when an employee owes money, the CRA can send the employer a requirement to pay notice, and the employer must remit the amounts as instructed (or the employer can become liable).
The legal authority for the CRA to issue a Requirement to Pay is found in the Income Tax Act, including section 224, which sets out the mechanism and consequences for non-compliance.
In payroll operations, this is a communication-and-compliance issue: payroll must correctly interpret the notice, apply the withholding/remittance as directed, and communicate impacts to internal stakeholders (HR
/finance) and, where appropriate, the affected employee-while ensuring the remittance is made exactly as the CRA notice requires.
NEW QUESTION # 26
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