UPDATED 2025 PAYROLL FUNDAMENTALS PART 1 EXAM WITH Q&A VERIFIED ANSWERS 100% GUARANTEED

UPDATED 2025 PAYROLL FUNDAMENTALS PART 1 EXAM WITH Q&A VERIFIED ANSWERS 100% GUARANTEED RQ and CRA define a car allowance as reasonable if: - CORRECT ANSWER-- 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: - CORRECT ANSWER-- 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: - CORRECT ANSWER-- 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) - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-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): - CORRECT ANSWER-- 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 - CORRECT ANSWER-- Earnings - Allowances - Benefits - Taxable expense reimbursement Earnings - CORRECT ANSWER-Dollar amounts the employer pays an employee for the work they perform Types of earnings - CORRECT ANSWER-- 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 - CORRECT ANSWER-Additional dollar amounts paid to employees for the use, or anticipated use, of their personal property for business purposes Benefits - CORRECT ANSWER-Dollar values attributed to something the employer has either provided to an employee or paid for on an employee's behalf Expense Reimbursements - CORRECT ANSWER-Dollar amounts paid to employees to cover expenses that they incur while performing their job. Regular payments - CORRECT ANSWER-Have an established frequency, such as weekly-paid salary or wages Non-regular payments - CORRECT ANSWER-payments that do not occur each pay period, for example, a bonus or a retroactive adjustment Salary - CORRECT ANSWER-A fixed amount of money paid to an employee for each pay period. Salary per pay period - CORRECT ANSWER-Annual salary / number of pay periods per year Wages - CORRECT ANSWER-Earnings which are based on the amount of time worked, usually at a rate per hour or per day Regular earnings - CORRECT ANSWER-Hourly rate x pay period regular hours worked Piecework - CORRECT ANSWER-A rate of pay earned per unit of production, regardless of the length of time taken Self-Insured Disability - CORRECT ANSWER-Employers often offer disability coverage that provides their employees with income in the event of absence due to illness or injury Sick Pay - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-Informal, unwritten plans exist in organizations that have no formal policy for sick leave. Wage-loss replacement plans (WLRP) - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-The amount paid to an employee while off work on vacation leave Overtime - CORRECT ANSWER-Time worked beyond the normal work day or work week Shift Premiums - CORRECT ANSWER-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): - CORRECT ANSWER-- 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 - CORRECT ANSWER-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 Tax on unreasonable car allowances - CORRECT ANSWER-Included in an employee's income and subject to statutory deductions Tax on reasonable car allowances - CORRECT ANSWER-Reasonable car allowances are non-taxable and excluded from income Car allowances can be provided as: - CORRECT ANSWER-- Flat amount - Fixed amount per business kilometer driven - Credit card or reimbursement for gas purchases Car Allowance - CORRECT ANSWER-An amount paid or reimbursed to an employee who uses their personal automobile for business Cash taxable benefits - CORRECT ANSWER-Subject to all statutory withholdings Non-Cash taxable benefits - CORRECT ANSWER-Subject to all statutory withholdings, except for EI and QPIP premiums If the employer reimburses employees for money they paid for the benefit - CORRECT ANSWER-The reimbursement is included in the employee's income as a cash taxable benefit If the employer pays a taxable benefit to a third party - CORRECT ANSWER-The value is included in the employee's income as a non-cash taxable benefit Taxable Benefits - CORRECT ANSWER-When an employer provides employees with items that are to the employee's benefits, the CRA and RQ may determine that the benefit is taxable to the employee Taxable Benefit: Short-term and Long-term disability plans - CORRECT ANSWER-There is no taxable benefit Taxable Benefit: Fees paid to employee for employee assistance plan - CORRECT ANSWER-Considered a cash taxable benefit Taxable Benefit: Fees paid directly to the provider for an employee assistance plan - CORRECT ANSWER-not considered a taxable benefit