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84 lines
4.9 KiB
ReStructuredText
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PAYROLL COMPLIANCE AND REGULATIONS
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Learning Objectives
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-------------------
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By the end of this chapter, you will have a foundational understanding of payroll compliance and regulations in Canada.
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This includes the various stakeholders involved, the objectives of payroll, and the legal frameworks that govern payroll
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processes. You will also learn how to differentiate between federal and provincial/territorial jurisdictions, and how they
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affect payroll administration. Additionally, you will understand the Canada Revenue Agency's criteria for determining whether
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an individual is classified as an employee or self-employed.
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This chapter will cover the following topics:
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1. Identify four uses of the term payroll
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2. Describe payroll's objectives
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3. Describe who payroll's stakeholders are
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4. Differentiate between federal and provincial/territorial jurisdictions
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5. Explain how each stakeholder affects payroll processes and procedures
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6. Apply the Canada Revenue Agency's factors for determining whether an individual is an employee or self-employed
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Introduction
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============
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Payroll is a necessary function in every organization that has employees, as each employee
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expects to be paid for the work they perform. While the amount of maximum remuneration
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that an employee receives for their work is not legislated by any government (unless the
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employee is a federal or provincial/territorial civil servant), there is legislation in place at
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both the federal and provincial/territorial levels that governs many aspects of processing
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employees' pay, their taxable benefits and observing their rights as employees.
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It is important to note that for the scope of this course, the payroll includes 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. This chapter illustrates how to determine if an employeeemployer relationship exists. Once an employee-employer relationship has been established,
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the correct method of payment for services can be determined.
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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.
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What are Payroll's Objectives?
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===============================
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The primary objective of the payroll function in every organization is to pay employees
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accurately and on time, in compliance with legislative requirements, for a full annual payroll
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cycle.
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Every employee expects to receive their pay on the day it is due in the manner arranged with
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their employer, either by cheque or direct deposit. In addition to ensuring that employees
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have been paid, payroll practitioners must also be able to communicate payroll information to
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all stakeholders.
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**Payroll** is the process of paying employees in exchange for the services they perform. The
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term payroll can refer to:
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- the department that administers the payroll
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- the total number of people employed by an organization
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- the wages and salaries paid out in a year
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- a list of employees to be paid and the amount due to each
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**Legislation** refers to laws enacted by a legislative body. In Canada there are many legislative
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sources that payroll practitioners must comply with at two separate levels ─ the federal and
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the provincial/territorial governments. Later in the chapter we will explore the compliance
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requirements for the various pieces of legislation from these sources.
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**Compliance** is the observance of official requirements. For payroll practitioners, this means
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performing payroll functions according to federal and provincial/territorial legislative and
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non-governmental stakeholder requirements.
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The legislative requirements are termed statutory. This means they are enacted, created, or
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regulated by statute, a law enacted by the legislative branch of a government. Fines and
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penalties can be imposed if an organization is not in compliance with the legislative
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requirements in each jurisdiction.
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When dealing with federal and provincial/territorial government agencies, payroll
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practitioners must know the many pieces of legislation that regulate their work and the
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compliance requirements associated with each. Payroll practitioners are responsible for
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ensuring their organization is compliant with all payroll related legislation, thus eliminating
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the potential for any fines or penalties.
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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 practitioners
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must therefore ensure the organization is compliant with all stakeholder requirements. |