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<li class="nav-item nav-item-this"><a href=""><span class="section-number">4. </span>PAYROLL COMPLIANCE AND REGULATIONS</a></li>
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<section id="payroll-compliance-and-regulations">
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<h1><span class="section-number">4. </span>PAYROLL COMPLIANCE AND REGULATIONS<a class="headerlink" href="#payroll-compliance-and-regulations" title="Link to this heading">¶</a></h1>
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<section id="learning-objectives">
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<h2><span class="section-number">4.1. </span>Learning Objectives<a class="headerlink" href="#learning-objectives" title="Link to this heading">¶</a></h2>
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<p>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.</p>
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<dl class="simple">
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<dt>This chapter will cover the following topics:</dt><dd><ol class="arabic simple">
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<li><p>Identify four uses of the term payroll</p></li>
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<li><p>Describe payroll’s objectives</p></li>
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<li><p>Describe who payroll’s stakeholders are</p></li>
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<li><p>Differentiate between federal and provincial/territorial jurisdictions</p></li>
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<li><p>Explain how each stakeholder affects payroll processes and procedures</p></li>
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<li><p>Apply the Canada Revenue Agency’s factors for determining whether an individual is an employee or self-employed</p></li>
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</ol>
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</dd>
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</dl>
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<section id="introduction">
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<h3><span class="section-number">4.1.1. </span>Introduction<a class="headerlink" href="#introduction" title="Link to this heading">¶</a></h3>
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<p>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.</p>
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<p>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.</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>
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<section id="what-are-payroll-s-objectives">
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<h3><span class="section-number">4.1.2. </span>What are Payroll’s Objectives?<a class="headerlink" href="#what-are-payroll-s-objectives" title="Link to this heading">¶</a></h3>
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<p>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.</p>
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<p>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.</p>
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<p><strong>Payroll</strong> is the process of paying employees in exchange for the services they perform. The
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term payroll can refer to:</p>
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<blockquote>
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<div><ul class="simple">
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<li><p>the department that administers the payroll</p></li>
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<li><p>the total number of people employed by an organization</p></li>
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<li><p>the wages and salaries paid out in a year</p></li>
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<li><p>a list of employees to be paid and the amount due to each</p></li>
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</ul>
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</div></blockquote>
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<p><strong>Legislation</strong> 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.</p>
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<p><strong>Compliance</strong> 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.</p>
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<p>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.</p>
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<p>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.</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 practitioners
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must therefore ensure the organization is compliant with all stakeholder requirements.</p>
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</section>
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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="#">4. PAYROLL COMPLIANCE AND REGULATIONS</a><ul>
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<li><a class="reference internal" href="#learning-objectives">4.1. Learning Objectives</a><ul>
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<li><a class="reference internal" href="#introduction">4.1.1. Introduction</a></li>
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<li><a class="reference internal" href="#what-are-payroll-s-objectives">4.1.2. What are Payroll’s Objectives?</a></li>
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<h4>Previous topic</h4>
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<p class="topless"><a href="terminology.html"
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title="previous chapter"><span class="section-number">3. </span>TERMINOLOGY</a></p>
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<h4>Next topic</h4>
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<p class="topless"><a href="compensation.html"
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title="next chapter"><span class="section-number">5. </span>DETERMINING ANNUAL AND PAY PERIOD EARNINGS</a></p>
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