Deck 3: Calculation of Net Pay , Employer Payroll Taxes and Premiums

Question 1

The cost of payroll is simply the total wages paid to employees.

Answer 1

False

Question 2

Prior to 2019 the following province did not assess an Employer Health Tax:

A) British Columbia
B) Ontario
C) Manitoba
D) Quebec
E) Newfoundland

Answer 2

British Columbia

Question 3

Calculate the Workers' Compensation premium owing for an employer in Ontario with assessable earnings equal to $295,000 annually in the agricultural Industry rate category (assume no employees exceed the maximum assessable earnings for the year).

Answer 3

Agriculture is a rate category with a premium charge of $2.88 per $100 of assessable earnings.
Total premium owing = $295,000/100 *2.88 = $8,496

Question 4

Employees in provinces other than Quebec must contribute additional premiums on insurable earnings over and above the Employment Insurance rate of 1.58% for their provincial Parental Insurance Plans.

Question 5

The rate of 1.58% for Employment Insurance Premiums will never change.

Question 6

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

A) 5.70%
B) 4.95%
C) 0.559%
D) 1.54%
E) 1.88%

Question 7

Employees in Quebec contribute Employment Insurance premiums at a rate of ____.

A) 5.25%
B) 4.95%
C) 0.559%
D) 1.20%
E) 1.88%

Question 8

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

A) 5.25%
B) 4.95%
C) 0.494%
D) 1.54%
E) 1.88%

Question 9

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 10

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.
Gross Taxable earnings is the same as Pensionable Earnings but adding back in any payments related to severance and retiring allowances. As there are no severance or retiring allowances for this employee, the Gross Taxable Earnings are the same as the Pensionable Earnings.

Question 11

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.
Net Taxable Earnings are Gross Taxable Earnings less employee contributions to a Registered Pension Plan, a Registered Retirement Savings Plan, union dues, amounts claimed on the TD1 for living in a prescribed zone and any other amounts authorized in writing by the Canada Revenue Agency.

Question 12

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, 2020.

Question 13

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 the Federal Tax deduction = $384.75 and Provincial Tax deduction = $190.50)
Based on 2020 rates and T4032 tables.