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<li class="nav-item nav-item-this"><a href=""><span class="section-number">2. </span>INTRODUCTION TO CANADIAN PAYROLL</a></li>
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<section id="introduction-to-canadian-payroll">
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<h1><span class="section-number">2. </span>INTRODUCTION TO CANADIAN PAYROLL<a class="headerlink" href="#introduction-to-canadian-payroll" title="Link to this heading">¶</a></h1>
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<p>Payroll is a necessary function in every organization that has employees,
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as each employee expects to be paid for the work they perform. While the
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amount of maximum remuneration that an employee receives for their work is
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not legislated by any government (unless the employee is a federal or
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provincial/territorial civil servant), there is legislation in place at
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both the federal and provincial/territorial levels that governs many
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aspects of processing employees’ pay, their taxable benefits and observing
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their rights as employees.</p>
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<p>t is important to note that this course deals with payroll, the function of paying employees
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for work performed for employers. Self-employed workers or contractors, who submit
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invoices for the work they perform and receive payment through accounts payable and not
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payroll, are not employees.</p>
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<p>Both the federal and the Québec governments provide factors that can be used to determine
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whether an employee-employer relationship exists. It is crucial to know how to determine the
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type of relationship that exists between the worker and the organization and to ensure that
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any payments made comply with legislation.</p>
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<section id="payroll-objectives-and-definitions">
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<h2><span class="section-number">2.1. </span>Payroll Objectives and Definitions<a class="headerlink" href="#payroll-objectives-and-definitions" title="Link to this heading">¶</a></h2>
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<p>The <strong>primary objective of the payroll function</strong> in every organization is to
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pay employees accurately and on time, in compliance with legislative
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requirements, for a full annual payroll cycle.</p>
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<p>Every employee expects to receive their pay on the day it is due in the
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manner arranged with their employer, either by cheque or direct deposit.
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In addition to ensuring that employees have been paid, payroll
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practitioners must also be able to communicate payroll information to
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all stakeholders.</p>
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<ul class="simple">
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<li><p><strong>Payroll</strong> is the process of paying employees in exchange for the services they perform.</p></li>
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<li><p><strong>Legislation</strong> refers to laws enacted by a legislative body. In Canada</p></li>
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</ul>
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<p>there are many legislative sources that payroll practitioners must comply
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with at two separate levels: the federal and the provincial/territorial
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governments. Later in the chapter we will explore the compliance
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requirements for the various pieces of legislation from these sources.</p>
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<ul class="simple">
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<li><p><strong>Compliance</strong> is the observance of official requirements. For payroll</p></li>
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</ul>
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<p>practitioners, this means performing payroll functions according to
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federal and provincial/territorial legislative and non-governmental
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stakeholder requirements.</p>
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<p>The legislative requirements are termed <strong>statutory</strong>. This means they are
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enacted, created, or regulated by statute, a law enacted by the legislative
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branch of a government. Fines and penalties can be imposed if an organization
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is not in compliance with the legislative requirements in each jurisdiction.</p>
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<p>When dealing with federal and provincial/territorial government agencies,
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payroll administrator must know the many pieces of legislation that
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regulate their work and the compliance requirements associated with each.
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Payroll administrators are responsible for ensuring their organization is
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compliant with all payroll related legislation, thus eliminating the
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potential for any fines or penalties.</p>
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<p>In payroll, there are also compliance requirements from other non-government stakeholders,
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for example, union collective agreements or group insurance policies. Payroll administrator
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must therefore ensure the organization is compliant with all stakeholder requirements.</p>
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<p>The responsibilities of the payroll administrator will differ depending on
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the size of the organization, the number of jurisdictions in which they pay,
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the reporting structure under which they work, and whether there are other
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related departments, such as human resources, finance and administration in
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the organization.</p>
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<p>Small and medium-sized organizations may have payroll administrators whose
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positions include other functions that, in a larger organization, would
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fall under other departments. This payroll practitioner may be required to
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handle multiple tasks, such as employee recruitment, human resource policy
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development, benefits administration, accounts payable, accounts receivable,
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budgets and/or administration.</p>
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<p>Larger organizations may have a distinct payroll department with specific
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payroll positions, in addition to separate human resources, accounting and
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administration groups. Even in a multi-departmental organization, payroll
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administrators must have knowledge of the various stages of the life cycle
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of an employee. From hiring through termination of employment, many of
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these stages will impact how to produce the employee’s pay and prepare
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required reports.</p>
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<p>The payroll department in a large organization may have:</p>
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<blockquote>
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<div><ul class="simple">
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<li><p>payroll administrators who are responsible for entering payroll data into the system and making required payroll remittances</p></li>
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<li><p>payroll coordinators who are responsible for preparing the payroll journal entries and reconciling the payroll related accounts</p></li>
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<li><p>payroll managers who manage the payroll function, the payroll staff and represent payroll at the management level</p></li>
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</ul>
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</div></blockquote>
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<section id="payroll-content-knowledge">
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<h3><span class="section-number">2.1.1. </span>Payroll Content Knowledge<a class="headerlink" href="#payroll-content-knowledge" title="Link to this heading">¶</a></h3>
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<p>Payroll administrators should know the following to effectively perform
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their duties:</p>
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<blockquote>
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<div><ul class="simple">
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<li><p><strong>Payroll Compliance Legislation:</strong> the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act, Employment/Labour Standards, privacy legislation, Workers’ Compensation and provincial/territorial payroll-specific legislation</p></li>
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<li><p><strong>Payroll Processes:</strong> the remuneration and deduction components of payroll and how to use these components to calculate a net pay in both regular and non-regular circumstances</p></li>
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<li><p><strong>Payroll Reporting:</strong> how to calculate and remit amounts due to government agencies, insurance companies, unions and other third parties.</p></li>
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</ul>
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</div></blockquote>
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<p>In addition, payroll reporting includes accounting for payroll expenses and accruals to internal financial systems and federal and provincial/territorial year-end reporting.</p>
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</section>
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<section id="technical-skills">
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<h3><span class="section-number">2.1.2. </span>Technical Skills<a class="headerlink" href="#technical-skills" title="Link to this heading">¶</a></h3>
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<p>The technical skills required by payroll professionals include proficiency in
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computer programs such as payroll software and financial systems,
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spreadsheets, databases and word processing.</p>
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<p>Organizations often change their payroll and business systems to meet new
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technology requirements and corporate reporting needs. It is important for
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payroll personnel to have the ability to be adaptable to changing systems.
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As a payroll practitioner, you must be prepared and willing to embrace
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continuous learning.</p>
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</section>
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<section id="personal-and-professional-skills">
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<h3><span class="section-number">2.1.3. </span>Personal and Professional Skills<a class="headerlink" href="#personal-and-professional-skills" title="Link to this heading">¶</a></h3>
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<p>The following personal and professional skills will assist payroll
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administrators in dealing with the various stakeholders involved in the
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payroll process:</p>
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<blockquote>
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<div><ul class="simple">
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<li><p>written communication skills, such as preparing employee emails and memos, management reports, policies and procedures and correspondence with various levels of government</p></li>
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<li><p>verbal communication skills, to be able to respond to internal and external stakeholder inquiries</p></li>
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<li><p>the ability to read, understand and interpret legal terminology found in documents such as collective agreements, benefit contracts and government regulations</p></li>
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<li><p>excellent mathematical skills to perform various calculations</p></li>
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<li><p>problem solving, decision-making, time management and organizational skills</p></li>
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</ul>
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</div></blockquote>
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</section>
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<section id="behavioural-and-ethical-standards">
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<h3><span class="section-number">2.1.4. </span>Behavioural and Ethical Standards<a class="headerlink" href="#behavioural-and-ethical-standards" title="Link to this heading">¶</a></h3>
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<p>Behaviour and ethics are two areas that build on the skills that an effective payroll practitioner
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must have. Effective payroll professionals should be:</p>
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<blockquote>
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<div><ul class="simple">
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<li><p>trustworthy, as the potential for fraud is ever present</p></li>
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<li><p>conscientious, with a keen attention to detail</p></li>
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<li><p>discreet, due to the confidential nature of information being handled</p></li>
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<li><p>tactful in dealing with employees who can be very sensitive when</p></li>
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</ul>
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<p>discussing their financial issues</p>
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<ul class="simple">
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<li><p>perceptive, able to understand all sides of an issue</p></li>
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<li><p>able to work under the pressures of absolute deadlines</p></li>
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<li><p>able to use common sense in order to recognize problems quickly and</p></li>
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</ul>
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<p>apply sound solutions</p>
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<ul class="simple">
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<li><p>able to remain objective and maintain a factual perspective when</p></li>
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</ul>
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<p>dealing with questions and inquiries</p>
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</div></blockquote>
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</section>
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</section>
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<section id="payroll-stakeholders">
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<h2><span class="section-number">2.2. </span>Payroll Stakeholders<a class="headerlink" href="#payroll-stakeholders" title="Link to this heading">¶</a></h2>
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</section>
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<section id="content-review">
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<h2><span class="section-number">2.3. </span>Content Review<a class="headerlink" href="#content-review" title="Link to this heading">¶</a></h2>
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<blockquote>
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<div><ul class="simple">
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<li><p>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.</p></li>
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<li><p>Payroll is the process of paying employees in exchange for the services they perform.</p></li>
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<li><p>Legislation refers to laws enacted by a legislative body.</p></li>
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<li><p>Compliance is the observance of official requirements.</p></li>
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<li><p>Payroll practitioner knowledge consists of information on payroll compliance legislation, payroll processes and payroll reporting as well as technical, personal and professional skills.</p></li>
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</ul>
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</div></blockquote>
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</section>
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<section id="review-questions">
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<h2><span class="section-number">2.4. </span>Review Questions<a class="headerlink" href="#review-questions" title="Link to this heading">¶</a></h2>
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<ol class="arabic simple">
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<li><p>What is the primary objective of the payroll department?</p></li>
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</ol>
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</section>
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</section>
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<h3><a href="index.html">Table of Contents</a></h3>
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<ul>
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<li><a class="reference internal" href="#">2. INTRODUCTION TO CANADIAN PAYROLL</a><ul>
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<li><a class="reference internal" href="#payroll-objectives-and-definitions">2.1. Payroll Objectives and Definitions</a><ul>
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<li><a class="reference internal" href="#payroll-content-knowledge">2.1.1. Payroll Content Knowledge</a></li>
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<li><a class="reference internal" href="#technical-skills">2.1.2. Technical Skills</a></li>
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<li><a class="reference internal" href="#personal-and-professional-skills">2.1.3. Personal and Professional Skills</a></li>
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<li><a class="reference internal" href="#behavioural-and-ethical-standards">2.1.4. Behavioural and Ethical Standards</a></li>
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</ul>
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</li>
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<li><a class="reference internal" href="#payroll-stakeholders">2.2. Payroll Stakeholders</a></li>
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<li><a class="reference internal" href="#content-review">2.3. Content Review</a></li>
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<li><a class="reference internal" href="#review-questions">2.4. Review Questions</a></li>
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title="next chapter"><span class="section-number">3. </span>PAYROLL COMPLIANCE AND REGULATIONS</a></p>
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