Payroll is a necessary function in every organization that has employees,
as each employee expects to be paid for the work they perform. While the
amount of maximum remuneration that an employee receives for their work is
@@ -51,7 +59,7 @@ whether an employee-employer relationship exists. It is crucial to know how to d
type of relationship that exists between the worker and the organization and to ensure that
any payments made comply with legislation.
The primary objective of the payroll function in every organization is to
pay employees accurately and on time, in compliance with legislative
requirements, for a full annual payroll cycle.
Payroll administrators should know the following to effectively perform
their duties:
@@ -132,7 +140,7 @@ their duties:
In addition, payroll reporting includes accounting for payroll expenses and accruals to internal financial systems and federal and provincial/territorial year-end reporting.
The technical skills required by payroll professionals include proficiency in
computer programs such as payroll software and financial systems,
spreadsheets, databases and word processing.
@@ -143,7 +151,7 @@ As a payroll practitioner, you must be prepared and willing to embrace
continuous learning.
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The following personal and professional skills will assist payroll
administrators in dealing with the various stakeholders involved in the
payroll process:
Behaviour and ethics are two areas that build on the skills that an effective payroll practitioner
must have. Effective payroll professionals should be:
@@ -183,13 +191,13 @@ must have. Effective payroll professionals should be:
Stakeholders are the individuals, groups and agencies, both internal
and external to the organization, who share an interest in the function and
output of the payroll department. Stakeholders can be considered customers of the payroll department and payroll practitioners
can take a proactive customer service approach to serving these individuals and groups.
Payroll Management Stakeholders are the federal and provincial/territorial governments,
the internal stakeholders and the external stakeholders. Internal stakeholders
include employees, employers and other departments within the organization.
@@ -197,7 +205,7 @@ External stakeholders include benefit carriers, courts, unions, pension
providers, charities, third party administrators and outsource/software vendors.
Government legislation provides the rules and regulations that the payroll function must
administer with respect to payments made to employees. For this reason, it is important for
the payroll practitioner to understand both the scope and the source of payroll-related
@@ -228,7 +236,7 @@ act to a provincial/territorial agency, and a provincial/territorial legislature
administration of a provincial/territorial act to a federal agency.
The Constitution Act of 1867 outlined the division of legislative power and authority between
federal and provincial/territorial jurisdictional governments. The exclusive legislative
authority of the Parliament of Canada extends to all matters regarding:
@@ -259,7 +267,7 @@ employees under federal jurisdiction in the following industries and organizatio
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Under the Constitution Act of 1867, the exclusive legislative authority of the provinces and
territories exists over:
@@ -282,7 +290,7 @@ Organizations may have some employees who fall under federal jurisdiction and an
group of employees who fall under provincial/territorial legislation.
Internal stakeholders are those individuals or departments closely related to the organization
that the payroll department is serving. This group includes employers, employees and other
departments in the organization.
@@ -303,7 +311,7 @@ needed for their various requirements.
information for budgeting, analytical and quality purposes.
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External stakeholders are organizations that are neither government nor internal stakeholders,
yet have a close working relationship with the payroll function. Compliance with external
stakeholder requirements is also a responsibility of the payroll department. In most cases,
@@ -341,7 +349,7 @@ efficiently.
The primary objective of the payroll function in every organization is to pay employees accurately and on time, in compliance with legislative requirements, for a full annual payroll cycle.
As subcontracting work or hiring assistants can affect a worker’s chance of profit or risk of loss, this can help determine
the type of business relationship.
The worker is an employee when:
@@ -212,7 +220,7 @@ the type of business relationship.
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When evaluating the nature of a working relationship, the Canada Revenue Agency (CRA) considers whether the individual
incurs fixed, ongoing costs or unreimbursed expenses. In traditional employee arrangements, employers typically reimburse
expenses that arise as part of the job—for example, travel or business-related costs.
@@ -240,7 +248,7 @@ relationship, reflecting the independence and financial responsibility character
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3.2.5. Responsibility for Investment and Management¶
When assessing whether a business relationship exists, one important indicator is the worker’s financial investment in the
services they provide. If an individual is required to invest in equipment, materials, or other resources to complete the
work, this suggests the presence of a contract for service rather than an employment relationship.
@@ -263,7 +271,7 @@ reflect the autonomy and financial risk typically associated with self-employmen
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A business relationship is often indicated when a worker has the ability to realize a profit or incur a loss, reflecting their
control over the financial and operational aspects of the services they provide. Self-employed individuals typically
negotiate their own rates, choose which contracts to accept, and may take on multiple contracts simultaneously. To fulfill
@@ -295,7 +303,7 @@ relationship.
Employment relationships are defined through contractual arrangements. A contract of service refers to a traditional
employer-employee relationship, where an individual commits to working for an employer—either on a full-time or part-time
basis—for a specified or ongoing period. The employer has authority over both the duties and how they are executed.
@@ -312,7 +320,7 @@ considerations include:
Collectively, these factors guide proper categorization for legal and tax purposes, helping organizations ensure compliance and mitigate potential risk.
2.4.1. Social Insurance Number (SIN)¶
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