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🍁 Payroll Administration Fall 2025 (v25.08.23) documentation
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🍁 Payroll Administration
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Version Fall 2025
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<h3>
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Table of Contents
</a>
</h3>
<ul>
<li class="toctree-l1">
<a class="reference internal" href="#introduction-to-canadian-payroll">
1. INTRODUCTION TO CANADIAN PAYROLL
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#payroll-objectives-and-definitions">
1.1. Payroll Objectives and Definitions
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#legislation-vs-regulation">
1.1.1. Legislation vs. regulation
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#payroll-content-knowledge">
1.1.2. Payroll Content Knowledge
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#technical-skills">
1.1.3. Technical Skills
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#personal-and-professional-skills">
1.1.4. Personal and Professional Skills
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#behavioural-and-ethical-standards">
1.1.5. Behavioural and Ethical Standards
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#payroll-stakeholders">
1.2. Payroll Stakeholders
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#payroll-management-stakeholders">
1.2.1. Payroll Management Stakeholders
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#government-stakeholders">
1.2.2. Government Stakeholders
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#federal-government">
1.2.3. Federal Government
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#provincial-territorial-governments">
1.2.4. Provincial/Territorial Governments
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#internal-stakeholders">
1.2.5. Internal Stakeholders
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#external-stakeholders">
1.2.6. External Stakeholders
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#content-review">
1.3. Content Review
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#review-questions">
1.4. Review Questions
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#payroll-compliance">
2. PAYROLL COMPLIANCE
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#the-canada-revenue-agency">
2.1. The Canada Revenue Agency
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#canada-pension-plan-cpp">
2.1.1. Canada Pension Plan (CPP)
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#employment-insurance-ei">
2.1.2. Employment Insurance (EI)
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#income-tax">
2.1.3. Income Tax
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#non-compliance-penalties">
2.2. Non-Compliance Penalties
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#employment-and-social-development-canada-esdc">
2.3. Employment and Social Development Canada (ESDC)
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#service-canada">
2.4. Service Canada
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#social-insurance-number-sin">
2.4.1. Social Insurance Number (SIN)
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#statistics-canada">
2.5. Statistics Canada
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#personal-privacy">
2.6. Personal Privacy
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#the-privacy-principles">
2.6.1. The Privacy Principles
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#the-personal-information-protection-and-electronic-documents-act-pipeda">
2.6.2. The Personal Information Protection and Electronic Documents Act (PIPEDA)
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#pension-benefits-standards-act">
2.7. Pension Benefits Standards Act
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#canadian-human-rights-act">
2.8. Canadian Human Rights Act
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#employment-equity-act">
2.9. Employment Equity Act
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#summary">
2.10. Summary
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#review-questions">
2.11. Review Questions
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#employee-vs-independent-contractor">
3. EMPLOYEE vs. INDEPENDENT CONTRACTOR
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#the-employee-employer-relationship">
3.1. The Employee-Employer Relationship
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#contract-of-service-employment">
3.1.1. Contract of Service (Employment)
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#contract-for-service-subcontracting">
3.1.2. Contract for Service (Subcontracting)
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#factors-determining-the-type-of-contract">
3.2. Factors Determining the Type of Contract
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#control">
3.2.1. Control
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#tools-and-equipment">
3.2.2. Tools and Equipment
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#subcontracting-work-or-hiring-assistants">
3.2.3. Subcontracting Work or Hiring Assistants
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#financial-risk">
3.2.4. Financial Risk
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#responsibility-for-investment-and-management">
3.2.5. Responsibility for Investment and Management
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#opportunity-for-profit">
3.2.6. Opportunity for Profit
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#review-summary">
3.3. Review Summary
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#review-questions">
3.4. Review Questions
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#canada-pension-plan">
4. Canada Pension Plan
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#who-must-contribute-to-the-canada-pension-plan">
4.1. Who Must Contribute to the Canada Pension Plan
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#employment-insurance">
5. Employment Insurance
</a>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#record-of-employment">
6. Record of Employment
</a>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#calculating-net-earnings">
7. CALCULATING NET EARNINGS
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#employment-income">
7.1. Employment Income
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#allowances">
7.2. Allowances
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#expenses">
7.3. Expenses
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#benefits">
7.4. Benefits
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#obnoarding-employee">
8. OBNOARDING EMPLOYEE
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#internal-forms">
8.1. Internal Forms
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#authorization-for-hiring">
8.1.1. Authorization for Hiring
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#union-membership">
8.1.2. Union Membership
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#benefit-enrollment-forms">
8.1.3. Benefit Enrollment Forms
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#confidentiality-agreement">
8.1.4. Confidentiality Agreement
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#required-federal-and-provincial-territorial-forms">
8.2. Required Federal and Provincial/Territorial Forms
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#tax-credits-td1">
8.2.1. Tax Credits (TD1)
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#tax-credits-tp-1015-3-v-quebec">
8.2.2. Tax Credits (TP-1015.3-V - Qu&eacute;bec)
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#entering-employee-information-into-sage50">
8.3. Entering Employee Information into Sage50
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#review-questions">
8.3.1. Review Questions
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#content-review-highlights">
8.4. Content Review Highlights
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#review-questions-sample">
8.5. Review Questions (Sample)
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#example-evaluations">
8.6. Example Evaluations
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#payroll-accounting">
9. Payroll Accounting
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#journal-entries">
9.1. Journal Entries
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#accounting-recap">
9.1.1. Accounting Recap
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#journal-entries">
9.1.2. Journal Entries
</a>
</li>
</ul>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#review-questions">
10. REVIEW QUESTIONS
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#new-employee-information">
10.1. New Employee Information
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#terminology">
11. TERMINOLOGY
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#pensionable-earnings">
11.1. Pensionable Earnings
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#insurable-earnings">
11.2. Insurable Earnings
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#rates-for-2025">
12. RATES FOR 2025
</a>
<ul>
<li class="toctree-l2">
<a class="reference internal" href="#canada-quebec-pension-plan-cpp-qpp">
12.1. CANADA / QUEBEC PENSION PLAN (CPP / QPP)
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#cpp2-contribution-rates-maximums">
12.2. CPP2 CONTRIBUTION RATES MAXIMUMS
</a>
</li>
</ul>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#references">
13. REFERENCES
</a>
</li>
<li class="toctree-l1">
<a class="reference internal" href="#errors-and-errata">
14. Errors and Errata
</a>
</li>
</ul>
</div>
</div>
</div>
<div class="document">
<div class="documentwrapper">
<div class="bodywrapper">
<div class="body" role="main">
<section id="about-the-author">
<h1>
ABOUT THE AUTHOR
<a class="headerlink" href="#about-the-author" title="Link to this heading">
&para;
</a>
</h1>
<p>
From 2005 to 2022 Alexander Bobkov (Alex) has successfully operated his own accounting firm, offering bookkeeping, accounting, and
payroll services to a diverse clientele in the National Capital Regions. With a rich educational background that spans from a college
diploma in Business Management to a Master&rsquo;s degree in Business Administration, he brings both academic insight and practical expertise
from his work. For the past five years, Alexander has focused specifically on the IT and payroll sector. This study guide reflects his
long-standing goal: to help professional business managers to build a solid foundation in payroll administration while easing the anxiety
often associated with its complexity. Designed to be clear, practical, and empowering, the guide equips readers with the skills needed
to confidently perform essential payroll functions encountered in day-to-day operations.
</p>
<div class="toctree-wrapper compound">
<span id="document-1_introduction">
</span>
<section id="introduction-to-canadian-payroll">
<h2>
INTRODUCTION TO CANADIAN PAYROLL
<a class="headerlink" href="#introduction-to-canadian-payroll" title="Link to this heading">
&para;
</a>
</h2>
<p>
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
not legislated by any government (unless the employee is a federal or
provincial/territorial civil servant), there is legislation in place at
both the federal and provincial/territorial levels that governs many
aspects of processing employees&rsquo; pay, their taxable benefits and observing
their rights as employees.
</p>
<p>
t is important to note that this course deals with payroll, the function of paying employees
for work performed for employers. Self-employed workers or contractors, who submit
invoices for the work they perform and receive payment through accounts payable and not
payroll, are not employees.
</p>
<p>
Both the federal and the Qu&eacute;bec governments provide factors that can be used to determine
whether an employee-employer relationship exists. It is crucial to know how to determine the
type of relationship that exists between the worker and the organization and to ensure that
any payments made comply with legislation.
</p>
<section id="payroll-objectives-and-definitions">
<h3>
Payroll Objectives and Definitions
<a class="headerlink" href="#payroll-objectives-and-definitions" title="Link to this heading">
&para;
</a>
</h3>
<p>
The
<strong>
primary objective of the payroll function
</strong>
in every organization is to
pay employees accurately and on time, in compliance with legislative
requirements, for a full annual payroll cycle.
</p>
<p>
Every employee expects to receive their pay on the day it is due in the
manner arranged with their employer, either by cheque or direct deposit.
In addition to ensuring that employees have been paid, payroll
practitioners must also be able to communicate payroll information to
all stakeholders.
</p>
<ul class="simple">
<li>
<p>
<strong>
Payroll
</strong>
is the process of paying employees in exchange for the services they perform.
</p>
</li>
<li>
<p>
<strong>
Legislation
</strong>
refers to laws enacted by a legislative body. In Canada
</p>
</li>
</ul>
<p>
there are many legislative sources that payroll practitioners must comply
with at two separate levels: the federal and the provincial/territorial
governments. Later in the chapter we will explore the compliance
requirements for the various pieces of legislation from these sources.
</p>
<ul class="simple">
<li>
<p>
<strong>
Compliance
</strong>
is the observance of official requirements. For payroll
</p>
</li>
</ul>
<p>
practitioners, this means performing payroll functions according to
federal and provincial/territorial legislative and non-governmental
stakeholder requirements.
</p>
<p>
The legislative requirements are termed
<strong>
statutory
</strong>
. This means they are
enacted, created, or regulated by statute, a law enacted by the legislative
branch of a government. Fines and penalties can be imposed if an organization
is not in compliance with the legislative requirements in each jurisdiction.
</p>
<p>
When dealing with federal and provincial/territorial government agencies,
payroll administrator must know the many pieces of legislation that
regulate their work and the compliance requirements associated with each.
Payroll administrators are responsible for ensuring their organization is
compliant with all payroll related legislation, thus eliminating the
potential for any fines or penalties.
</p>
<p>
In payroll, there are also compliance requirements from other non-government stakeholders,
for example, union collective agreements or group insurance policies. Payroll administrator
must therefore ensure the organization is compliant with all stakeholder requirements.
</p>
<p>
The responsibilities of the payroll administrator will differ depending on
the size of the organization, the number of jurisdictions in which they pay,
the reporting structure under which they work, and whether there are other
related departments, such as human resources, finance and administration in
the organization.
</p>
<p>
Small and medium-sized organizations may have payroll administrators whose
positions include other functions that, in a larger organization, would
fall under other departments. This payroll practitioner may be required to
handle multiple tasks, such as employee recruitment, human resource policy
development, benefits administration, accounts payable, accounts receivable,
budgets and/or administration.
</p>
<p>
Larger organizations may have a distinct payroll department with specific
payroll positions, in addition to separate human resources, accounting and
administration groups. Even in a multi-departmental organization, payroll
administrators must have knowledge of the various stages of the life cycle
of an employee. From hiring through termination of employment, many of
these stages will impact how to produce the employee&rsquo;s pay and prepare
required reports.
</p>
<p>
The payroll department in a large organization may have:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
payroll administrators who are responsible for entering payroll data into the system and making required payroll remittances
</p>
</li>
<li>
<p>
payroll coordinators who are responsible for preparing the payroll journal entries and reconciling the payroll related accounts
</p>
</li>
<li>
<p>
payroll managers who manage the payroll function, the payroll staff and represent payroll at the management level
</p>
</li>
</ul>
</div>
</blockquote>
<section id="legislation-vs-regulation">
<h4>
Legislation vs. regulation
<a class="headerlink" href="#legislation-vs-regulation" title="Link to this heading">
&para;
</a>
</h4>
<p>
<strong>
The legislation
</strong>
specifies the __requirements__.
</p>
<p>
<strong>
The regulation
</strong>
specifies the __methods__ of applying the legislation.
</p>
</section>
<section id="payroll-content-knowledge">
<h4>
Payroll Content Knowledge
<a class="headerlink" href="#payroll-content-knowledge" title="Link to this heading">
&para;
</a>
</h4>
<p>
Payroll administrators should know the following to effectively perform
their duties:
</p>
<blockquote>
<div>
<ul class="simple">
<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&rsquo; Compensation and provincial/territorial payroll-specific legislation
</p>
</li>
<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>
<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>
</ul>
</div>
</blockquote>
<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>
</section>
<section id="technical-skills">
<h4>
Technical Skills
<a class="headerlink" href="#technical-skills" title="Link to this heading">
&para;
</a>
</h4>
<p>
The technical skills required by payroll professionals include proficiency in
computer programs such as payroll software and financial systems,
spreadsheets, databases and word processing.
</p>
<p>
Organizations often change their payroll and business systems to meet new
technology requirements and corporate reporting needs. It is important for
payroll personnel to have the ability to be adaptable to changing systems.
As a payroll practitioner, you must be prepared and willing to embrace
continuous learning.
</p>
</section>
<section id="personal-and-professional-skills">
<h4>
Personal and Professional Skills
<a class="headerlink" href="#personal-and-professional-skills" title="Link to this heading">
&para;
</a>
</h4>
<p>
The following personal and professional skills will assist payroll
administrators in dealing with the various stakeholders involved in the
payroll process:
</p>
<blockquote>
<div>
<ul class="simple">
<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>
<li>
<p>
verbal communication skills, to be able to respond to internal and external stakeholder inquiries
</p>
</li>
<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>
<li>
<p>
excellent mathematical skills to perform various calculations
</p>
</li>
<li>
<p>
problem solving, decision-making, time management and organizational skills
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="behavioural-and-ethical-standards">
<h4>
Behavioural and Ethical Standards
<a class="headerlink" href="#behavioural-and-ethical-standards" title="Link to this heading">
&para;
</a>
</h4>
<p>
Behaviour and ethics are two areas that build on the skills that an effective payroll practitioner
must have. Effective payroll professionals should be:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
trustworthy, as the potential for fraud is ever present
</p>
</li>
<li>
<p>
conscientious, with a keen attention to detail
</p>
</li>
<li>
<p>
discreet, due to the confidential nature of information being handled
</p>
</li>
<li>
<p>
tactful in dealing with employees who can be very sensitive when
</p>
</li>
</ul>
<p>
discussing their financial issues
</p>
<ul class="simple">
<li>
<p>
perceptive, able to understand all sides of an issue
</p>
</li>
<li>
<p>
able to work under the pressures of absolute deadlines
</p>
</li>
<li>
<p>
able to use common sense in order to recognize problems quickly and
</p>
</li>
</ul>
<p>
apply sound solutions
</p>
<ul class="simple">
<li>
<p>
able to remain objective and maintain a factual perspective when
</p>
</li>
</ul>
<p>
dealing with questions and inquiries
</p>
</div>
</blockquote>
</section>
</section>
<section id="payroll-stakeholders">
<h3>
Payroll Stakeholders
<a class="headerlink" href="#payroll-stakeholders" title="Link to this heading">
&para;
</a>
</h3>
<p>
<strong>
Stakeholders
</strong>
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.
</p>
<section id="payroll-management-stakeholders">
<h4>
Payroll Management Stakeholders
<a class="headerlink" href="#payroll-management-stakeholders" title="Link to this heading">
&para;
</a>
</h4>
<p>
<strong>
Payroll Management Stakeholders
</strong>
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.
External stakeholders include benefit carriers, courts, unions, pension
providers, charities, third party administrators and outsource/software vendors.
</p>
</section>
<section id="government-stakeholders">
<h4>
Government Stakeholders
<a class="headerlink" href="#government-stakeholders" title="Link to this heading">
&para;
</a>
</h4>
<p>
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
legislation.
</p>
<p>
Canada is ruled by a federal government with ten largely self-governing provinces and three
territories controlled by the federal government. Payroll practitioners have to be compliant
not only with the federal government legislation, but with the provincial and territorial
governments&rsquo; legislation as well.
</p>
<p>
As a result, payroll practitioners and their organizations are affected by the enactment of
legislation at both the federal and provincial/territorial level.
The federal parliament has the power to make laws for the peace, order and good government
of Canada. The federal cabinet is responsible for most of the legislation introduced by
parliament, and has the sole power to prepare and introduce tax legislation involving the
expenditure of public money.
</p>
<p>
The provincial/territorial legislatures have power over direct taxation in the province or
territory for the purposes of natural resources, prisons (except for federal penitentiaries),
charitable institutions, hospitals (except marine hospitals), municipal institutions, education,
licences for provincial/territorial and municipal revenue purposes, local works, incorporation
of provincial/territorial organizations, the creation of courts and the administration of justice,
fines and penalties for breaking provincial/territorial laws.
</p>
<p>
In the case of old age, disability, and survivor&rsquo;s pensions, again both the federal and
provincial/territorial governments have power. In this instance, if their laws conflict, the
provincial/territorial power prevails.
</p>
<p>
The federal government cannot transfer any of its powers to a provincial/territorial
legislature, nor can a provincial/territorial legislature transfer any of its powers to the federal
government. The federal government can, however, delegate the administration of a federal
act to a provincial/territorial agency, and a provincial/territorial legislature can delegate the
administration of a provincial/territorial act to a federal agency.
</p>
</section>
<section id="federal-government">
<h4>
Federal Government
<a class="headerlink" href="#federal-government" title="Link to this heading">
&para;
</a>
</h4>
<p>
The
<em>
Constitution Act of 1867
</em>
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:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the regulation of trade and commerce
</p>
</li>
<li>
<p>
the raising of money by any mode or system of taxation
</p>
</li>
<li>
<p>
the borrowing of money on the public credit
</p>
</li>
<li>
<p>
the postal service
</p>
</li>
<li>
<p>
fixing and providing salaries and allowances for civil and other officers of the Government of Canada
</p>
</li>
<li>
<p>
navigation and shipping
</p>
</li>
<li>
<p>
ferries between a province and any British or foreign country or between two provinces
</p>
</li>
<li>
<p>
criminal law, except the Constitution of Courts of Criminal Jurisdiction, but including the Procedure in Criminal Matters
</p>
</li>
<li>
<p>
anything not specifically assigned to the provinces under this Act
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The Canada Labour Code is legislation that consolidates certain statutes respecting labour.
Part I deals with Industrial Relations, Part II deals with Occupational Health and Safety and
Part III deals with Labour Standards. The primary objective of Part III is to establish and
protect employees&rsquo; and employers&rsquo; rights to fair and equitable conditions of employment.
</p>
<p>
Part III provisions establish minimum requirements concerning the working conditions of
employees under federal jurisdiction in the following industries and organizations:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
industries and undertakings of inter-provincial/territorial, national, or international nature, that is, transportation, communications, radio and television broadcasting, banking, uranium mining, grain elevators, and flour and feed operations
</p>
</li>
<li>
<p>
organizations whose operations have been declared for the general advantage of Canada or two or more provinces, and such Crown corporations as Canada Post Corporation, and the Canadian Broadcasting Corporation (CBC)
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="provincial-territorial-governments">
<h4>
Provincial/Territorial Governments
<a class="headerlink" href="#provincial-territorial-governments" title="Link to this heading">
&para;
</a>
</h4>
<p>
Under the
<em>
Constitution Act of 1867
</em>
, the exclusive legislative authority of the provinces and
territories exists over:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
all laws regarding property and civil rights, which give the provinces/territories the authority to enact legislation to establish employment standards for working conditions
</p>
</li>
<li>
<p>
employment in manufacturing, mining, construction, wholesale and retail trade, service industries, local businesses and any industry or occupation not specifically covered under federal jurisdiction
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The existing divisions between federal and provincial/territorial control impact payroll when
dealing with employment/labour standards. Employment/labour standards are rules legislated
by each provincial/territorial jurisdiction that dictate issues such as hours of work, minimum
wage, overtime, vacation pay and termination pay requirements.
</p>
<p>
Employers must follow the employment/labour standards legislated by the jurisdiction in
which their employees work, unless they are governed by federal labour standards. Federal
labour standards apply to certain industries and organizations, regardless of where the
employees work.
</p>
<p>
The person or persons performing the payroll function must clearly understand under which
employment/labour standards jurisdiction the employees of the organization fall.
Organizations may have some employees who fall under federal jurisdiction and another
group of employees who fall under provincial/territorial legislation.
</p>
</section>
<section id="internal-stakeholders">
<h4>
Internal Stakeholders
<a class="headerlink" href="#internal-stakeholders" title="Link to this heading">
&para;
</a>
</h4>
<p>
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.
</p>
<p>
Employers - Management may require certain information from payroll to make sound
business decisions.
</p>
<p>
Employees - Employees require that their pay is received in a timely and accurate manner to
meet personal obligations. Employees must also be assured that their personal information is
kept confidential.
</p>
<p>
Other departments - Many departments interact with payroll, either for information or
reporting. According to the Canadian Payroll Association&rsquo;s 2020 National Payroll Week
(NPW) Payroll Professional Research Survey, fifty-five percent of payroll practitioners
report through the finance department and thirty-two percent report through the human
resources department.
</p>
<p>
Information such as general ledger posting, payroll and benefit costs
and salary information must flow between payroll, human resources and finance in formats
needed for their various requirements.
</p>
<p>
In addition, other departments such as contracts and manufacturing often need payroll
information for budgeting, analytical and quality purposes.
</p>
</section>
<section id="external-stakeholders">
<h4>
External Stakeholders
<a class="headerlink" href="#external-stakeholders" title="Link to this heading">
&para;
</a>
</h4>
<p>
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,
compliance will require that payroll request a cheque from accounts payable and send it to
the external organization along with supporting documentation.
</p>
<p>
Benefit Carriers are insurance companies that provide benefit coverage to employees.
Payroll is responsible for deducting and remitting premiums for the insurance coverage to the
carriers and for providing reports on employee enrolment and coverage levels.
</p>
<p>
Courts and the CRA require payroll to accurately deduct and remit amounts ordered to be
withheld through garnishments, third party demands, requirements to pay and support
deduction orders.
</p>
<p>
<strong>
Unions
</strong>
require that payroll accurately deduct and remit union dues and initiation fees, and to
ensure that the terms of the collective agreement are adhered to. It is estimated that just under
one-third of the workforce in Canada belongs to a trade union. Payroll professionals must be
familiar with the role and activities of trade unions and the responsibilities of the employer
and the payroll department in a unionized environment.
</p>
<p>
Trade unions negotiate with the employer, through collective bargaining, the wages, benefits,
allowances and other terms and conditions of employment on behalf of their member
employees. The outcome of negotiations is a collective agreement, which is a legally binding
contract between the employer, the union and the employees.
</p>
<p>
<strong>
Pension Providers
</strong>
are third party pension plan providers that may require payroll to provide
enrolment reports on participating employees and length of service calculations, and to remit
employee deductions and employer contributions.
</p>
<p>
<strong>
Charities
</strong>
have arrangements with some organizations to facilitate employee donations
through payroll deductions. Payroll is responsible for remitting these deductions to the
charity.
</p>
<p>
<strong>
Third Party Administrators
</strong>
are organizations that affect the administration of the payroll
function. Examples of these external stakeholders are banking institutions or benefit
organizations that offer Group Registered Retirement Saving Plans (RRSP). Payroll is
responsible for deducting any employee contributions and remitting employer and employee
contributions to the plan administrator.
</p>
<p>
<strong>
Outsource/Software vendors
</strong>
are payroll service providers or payroll software vendors that
work with the payroll department to ensure the payroll is being processed accurately and
efficiently.
</p>
</section>
</section>
<section id="content-review">
<h3>
Content Review
<a class="headerlink" href="#content-review" title="Link to this heading">
&para;
</a>
</h3>
<blockquote>
<div>
<ul class="simple">
<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>
<li>
<p>
Payroll is the process of paying employees in exchange for the services they perform.
</p>
</li>
<li>
<p>
Legislation refers to laws enacted by a legislative body.
</p>
</li>
<li>
<p>
Compliance is the observance of official requirements.
</p>
</li>
<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>
<li>
<p>
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.
</p>
</li>
<li>
<p>
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.
</p>
</li>
<li>
<p>
External stakeholders include benefit carriers, courts, unions, pension providers, charities, third party administrators and outsource/software vendors.
</p>
</li>
<li>
<p>
The federal parliament has the power to make laws for the peace, order and good government of Canada.
</p>
</li>
<li>
<p>
The provincial/territorial legislatures have power over direct taxation in the province/territory for provincial/territorial purposes.
</p>
</li>
<li>
<p>
Federal control exists over industries and undertakings of inter-provincial/territorial, national, or international nature and organizations whose operations have been declared for the general advantage of Canada or two or more provinces and Crown corporations.
</p>
</li>
<li>
<p>
Provincial/territorial legislation exists over all laws regarding property and civil rights, and employment in manufacturing, mining, construction, wholesale and retail trade, service industries, local businesses and any industry or occupation not specifically covered under federal jurisdiction.
</p>
</li>
<li>
<p>
Employers must follow the employment/labour standards legislated by the jurisdiction in which their employees work, unless they are governed by federal labour standards.
</p>
</li>
<li>
<p>
Where legislation requires employer compliance, there are financial penalties or the possibility of legal action to encourage compliance.
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="review-questions">
<h3>
Review Questions
<a class="headerlink" href="#review-questions" title="Link to this heading">
&para;
</a>
</h3>
<ol class="arabic simple">
<li>
<p>
What is the primary objective of the payroll department?
</p>
</li>
<li>
<p>
List the three types of payroll management stakeholders and provide an example of each.
</p>
</li>
<li>
<p>
Explain the difference between legislation and regulation.
</p>
</li>
<li>
<p>
List three external stakeholders and explain their compliance requirements.
</p>
</li>
</ol>
</section>
</section>
<span id="document-2_compliance">
</span>
<section id="payroll-compliance">
<h2>
PAYROLL COMPLIANCE
<a class="headerlink" href="#payroll-compliance" title="Link to this heading">
&para;
</a>
</h2>
<section id="the-canada-revenue-agency">
<h3>
The Canada Revenue Agency
<a class="headerlink" href="#the-canada-revenue-agency" title="Link to this heading">
&para;
</a>
</h3>
<p>
Under the Canada Pension Plan Act and the Employment Insurance Act, the CRA is
responsible for determining:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
whether or not an individual&rsquo;s employment is pensionable under the Canada Pension
</p>
</li>
</ul>
</div>
</blockquote>
<p>
Plan Act or insurable under the Employment Insurance Act
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the types of earnings that are considered pensionable or insurable
</p>
</li>
<li>
<p>
how many hours an insured person has in insurable employment
</p>
</li>
<li>
<p>
the recovery of any debts owed as a result of an overpayment of Canada Pension
</p>
</li>
</ul>
</div>
</blockquote>
<p>
Plan, Employment Insurance, or Old Age Security benefits
</p>
<p>
The CRA is also responsible for ensuring that CPP contributions and EI premiums are
deducted, remitted and reported as required by legislation.
</p>
<p>
The Canada Revenue Agency (CRA) is a federal government agency that manages the
following business lines for the federal government: Tax Services and Benefit Programs.
The Tax Services business line assists over 25 million individuals, businesses, trusts, and
organizations to meet their obligations under the tax system. Each year, the CRA collects
approximately $324 billion in gross taxes and excise duties on behalf of the federal and
provincial governments - the equivalent of about $1.2 billion every working day. The CRA&rsquo;s
mission is to promote compliance with Canada&rsquo;s tax legislation and regulations through
communication, quality service, and responsible enforcement, thereby contributing to the
economic and social well-being of Canadians.
</p>
<p>
From this mission comes the CRA&rsquo;s mandate to:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
collect revenues and administer tax laws for the federal government and for most provinces and territories
</p>
</li>
<li>
<p>
deliver various social and economic benefit incentive programs to Canadians
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The CRA tracks the success of the first part of its mandate by measuring compliance in the following areas:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
<strong>
Filing:
</strong>
the CRA&rsquo;s goal is to have over 90% of individual and corporate income tax and registered business&rsquo; goods and services tax/harmonized sales tax (GST/HST) returns filed on time.
</p>
</li>
<li>
<p>
<strong>
Registration:
</strong>
the CRA measures its success in this area by ensuring that the majority of all known businesses are registered for various programs including corporate income tax, GST/HST, payroll deductions, and import/export accounts.
</p>
</li>
<li>
<p>
<strong>
Remittance:
</strong>
the CRA&rsquo;s goal is to have over 90% of individual and corporate tax filers pay their taxes on time.
</p>
</li>
<li>
<p>
<strong>
Reporting:
</strong>
the CRA measures reporting compliance through the information it receives on tax documents, for example, the T4 and T4A information slips.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The CRA&rsquo;s program responsibilities that are specifically related to payroll include the administration of:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the Canada Pension Plan (CPP) (shared responsibility with Employment and Social Development Canada and Service Canada)
</p>
</li>
<li>
<p>
Employment Insurance (EI) (shared responsibility with Employment and Social Development Canada and Service Canada)
</p>
</li>
<li>
<p>
Income Tax
</p>
</li>
</ul>
</div>
</blockquote>
<p>
Each of these programs requires compliance by employers to withhold deductions from their
employees&rsquo; pay for CPP contributions, EI premiums and income tax deductions. These
withholdings are termed statutory deductions as the deductions are required under legislative
statute. Statutory deductions are the first deductions to be withheld from an employee&rsquo;s gross
pay.
</p>
<section id="canada-pension-plan-cpp">
<h4>
Canada Pension Plan (CPP)
<a class="headerlink" href="#canada-pension-plan-cpp" title="Link to this heading">
&para;
</a>
</h4>
<p>
The Canada Pension Plan became operational on January 1, 1966. The plan was fully
effective in 1976 after a ten year transitional period.
The Canada Pension Plan is a social insurance program, legislated under the federal Canada
Pension Plan Act, designed to provide protection in the form of benefits to contributors and
their families against loss of income due to retirement.
</p>
<p>
In addition to retirement pension benefits, the plan provides supplementary benefits in the form of:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
surviving spouse pensions
</p>
</li>
<li>
<p>
disability benefits
</p>
</li>
<li>
<p>
benefits for orphans and children of disabled contributors
</p>
</li>
<li>
<p>
death benefits payable upon the death of a contributor
</p>
</li>
</ul>
</div>
</blockquote>
<p>
All employers are required by law to deduct CPP contributions from pensionable earnings
paid to their employees, and to remit these deductions, along with the employer&rsquo;s portion, to
the CRA. The employer matches the employee&rsquo;s contributions dollar for dollar.
</p>
<div class="admonition-example admonition">
<p class="admonition-title">
EXAMPLE
</p>
<p>
Janet Frank has $45.00 in CPP contributions deducted from her gross pay. Her employer,
Northern Skies, must match her contribution of $45.00. A total of $90.00 in CPP contributions must be remitted to the CRA.
</p>
</div>
<p>
CPP contributions take priority over all other deductions and are therefore the first statutory
deduction to be withheld from an employee&rsquo;s gross pay.
</p>
</section>
<section id="employment-insurance-ei">
<h4>
Employment Insurance (EI)
<a class="headerlink" href="#employment-insurance-ei" title="Link to this heading">
&para;
</a>
</h4>
<p>
The CRA&rsquo;s responsibility for the Employment Insurance program is associated with the
collection of employee and employer premiums. It also makes decisions about which types of
remuneration are considered insurable and, therefore, subject to EI premiums.
All employers are required by law to deduct EI premiums from the insurable earnings paid to
their employees, and remit these deductions, along with the employer&rsquo;s portion, to the CRA.
The employer&rsquo;s portion is 1.4 times the employee&rsquo;s portion.
</p>
<div class="admonition-example admonition">
<p class="admonition-title">
EXAMPLE
</p>
<p>
Janet Frank has $20.00 in EI premiums deducted from her gross pay. Her employer, Northern
Skies must contribute $28.00 ($20.00 x 1.4). A total of $48.00 in EI premiums must be
remitted to the CRA.
</p>
</div>
<p>
EI premiums are the second statutory deduction to be withheld from an employee&rsquo;s pay.
Employers are also required to track the employee&rsquo;s insurable earnings and insurable hours
by pay period for reporting purposes, such as completing the Record of Employment for a
terminated or inactive employee.
</p>
</section>
<section id="income-tax">
<h4>
Income Tax
<a class="headerlink" href="#income-tax" title="Link to this heading">
&para;
</a>
</h4>
<p>
Income taxation began in Canada, and in many other countries, during World War I. In July
1917, the Government of Canada passed legislation which enabled the government to levy a
temporary tax on personal income. This tax was intended to help finance government
expenditures for World War I; however, it eventually became the basic tax on all incomes.
</p>
<p>
When income tax was first introduced, each person was responsible for paying their own
income tax directly to the federal government. In 1940, the federal government legislated
deductions at source, which meant that employers became responsible for withholding
income tax from remuneration paid to employees. Beginning January 1, 1962, all provinces
imposed personal income tax; prior to that date, only Qu&eacute;bec imposed such a tax.
</p>
<p>
Income tax withholdings are calculated by applying a federal tax rate and a separate
provincial/territorial tax rate to the employee&rsquo;s taxable income. The employee&rsquo;s province of
employment determines which provincial/territorial tax rate to apply. The federal
government and all provinces and territories, except Qu&eacute;bec, have the same definition of
taxable income.
</p>
<p>
All Canadian provinces/territories, except Qu&eacute;bec, have entered into tax collection
agreements with the federal government. Under these agreements the CRA collects the
provincial/territorial income taxes on behalf of the provinces/territories. The CRA then
distributes the provincial/territorial income taxes it has collected through a series of transfer
payments to the provinces/territories. These transfer payments are based on the personal tax
returns filed by Canadian taxpayers.
</p>
<p>
As the federal government collects both the federal and the provincial/territorial portions of
tax from all employees working in a province/territory other than Qu&eacute;bec, the two tax
withholdings, federal and provincial/territorial, are combined into one deduction amount. The
employee may only see one item
<em>
Income Tax
</em>
or
<em>
Federal Income Tax
</em>
listed on their pay
statement, however it is the total of two withholdings.
</p>
<p>
Qu&eacute;bec collects its own provincial income tax. There are two separate income tax deductions
withheld from Qu&eacute;bec employees &mdash; one for federal income tax and the other for Qu&eacute;bec
provincial income tax. The federal income tax is remitted to the CRA and the Qu&eacute;bec
provincial income tax is remitted to Revenu Qu&eacute;bec (RQ). Qu&eacute;bec employees will see
<em>
Federal Income Tax
</em>
and
<em>
Qu&eacute;bec Income Tax
</em>
listed separately on their pay statements.
RQ is discussed extensively in a later chapter.
</p>
</section>
</section>
<section id="non-compliance-penalties">
<h3>
Non-Compliance Penalties
<a class="headerlink" href="#non-compliance-penalties" title="Link to this heading">
&para;
</a>
</h3>
<p>
If an organization fails to deduct and remit the amounts withheld from employees for CPP
contributions, EI premiums and income tax, it may be left in the position of having to pay
both the employer&rsquo;s and the employee&rsquo;s portion of deductions not taken, as well as penalties
and interest charges on the outstanding amount.
</p>
<p>
An employer who remits withholdings or deductions late is subject to the following penalties:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
3% will be applied to remittances that are 1 to 3 days late
</p>
</li>
<li>
<p>
5% for remittances that are 4 or 5 days late
</p>
</li>
<li>
<p>
7% for remittances that are 6 or 7 days late
</p>
</li>
<li>
<p>
10% for remittances that are 8 or more days late
</p>
</li>
</ul>
</div>
</blockquote>
<p>
An employer who withholds the statutory deductions but does not remit them, or fails to
deduct the required deductions, will be subject to a 10% penalty for the first occurrence on
the amount that should have been deducted and remitted. This penalty may increase to 20%
for the second and each subsequent occurrence in the same calendar year if the failure was
made knowingly or under circumstances of gross negligence. Penalties will be applied to
amounts in excess of $500; however, in the case of wilful delay or deficiency, these penalties
can be levied on amounts of less than $500.
</p>
<p>
The Canada Revenue Agency (CRA) charges interest on any unpaid remittances and unpaid
penalties from the day the payment was due. The interest rate is determined every three
months, in accordance with the prescribed interest rates, and is available on the CRA
website.
</p>
<p>
As a payroll practitioner, you need to have a clear understanding of how and when to make
the required deductions and remittances to avoid these penalties and interest charges.
</p>
<p>
All monies deducted on behalf of the CRA are considered to be held &ldquo;in trust&rdquo; for the
Receiver General. The amount owed must be kept separate from the operating funds of the
organization. In the event of estate liquidation, assignment, receivership, or bankruptcy the
trust money for statutory deductions is still owed to the CRA.
</p>
</section>
<section id="employment-and-social-development-canada-esdc">
<h3>
Employment and Social Development Canada (ESDC)
<a class="headerlink" href="#employment-and-social-development-canada-esdc" title="Link to this heading">
&para;
</a>
</h3>
<p>
Employment and Social Development Canada (ESDC), a department of the Government of
Canada, is committed to building a stronger and more competitive Canada by supporting
Canadians in making choices that help them live productive and rewarding lives and to
improve their quality of life.
</p>
<p>
To do this, the department:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
develops policies that make Canada a society in which all can use their talents, skills and resources to participate in learning, work and their community
</p>
</li>
<li>
<p>
creates programs and support initiatives that help Canadians move through life&rsquo;s transitions&mdash;from families with children to seniors, from school to work, from one job to another, from unemployment to employment, from the workforce to retirement
</p>
</li>
<li>
<p>
creates better outcomes for Canadians through service excellence with Service Canada and other partners
</p>
</li>
</ul>
</div>
</blockquote>
<p>
ESDC supports human capital development and labour market development; and is dedicated
to establishing a culture of lifelong learning for Canadians. Some of their specific program
responsibilities include:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Canada Pension Plan and Old Age Security
</p>
</li>
<li>
<p>
Employment Insurance
</p>
</li>
<li>
<p>
Employment Programs
</p>
</li>
<li>
<p>
Youth Employment Strategies
</p>
</li>
<li>
<p>
Canada Education Savings Program
</p>
</li>
<li>
<p>
Canada Student Loans and Grants
</p>
</li>
</ul>
</div>
</blockquote>
<p>
ESDC is responsible for matters relating to:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
amending the regulations made under the Canada Pension Plan and the Employment
<em>
Insurance Act
</em>
</p>
</li>
<li>
<p>
keeping records of each individual&rsquo;s CPP contributions and pensionable earnings
</p>
</li>
<li>
<p>
the establishment of annual maximum insurable earnings
</p>
</li>
<li>
<p>
the administration of provisions related to Wage Loss plans
</p>
</li>
<li>
<p>
the administration of provisions regarding Job Creation programs
</p>
</li>
</ul>
</div>
</blockquote>
<p>
Almost all of today&rsquo;s seniors receive income from Canada&rsquo;s public pensions. Basic financial
support is also available to survivors, people who become too disabled to work, and their
children. These pensions and benefits are delivered through the Canada Pension Plan (CPP)
and Old Age Security (OAS) programs. Together, the CPP and OAS programs provide a
modest base upon which Canadians can build their retirement income.
</p>
<p>
The amount of CPP benefits is based on an individual&rsquo;s CPP contributions. Employees
between the ages of 18 to 70 years old make contributions that are calculated on their annual
pensionable earnings between a minimum and a maximum amount. The minimum amount is
frozen at $3,500, while the maximum pensionable earnings are set each January, based on
increases in the average wage in Canada.
</p>
<p>
Employment Insurance (EI) is the program with the greatest impact on payroll. This program
provides temporary financial assistance for unemployed Canadians while they look for work
or upgrade their skills. It also provides coverage for Canadians who are sick, pregnant or
caring for a newborn or adopted child. Individuals who must care for a family member who
is seriously ill with a significant risk of death may also be assisted by Employment Insurance
benefits. Application of the EI rules will be looked at in more detail in another chapter.
The first Unemployment Insurance (UI) Act was passed into law in 1940, and was based on
the British Unemployment Insurance Act, 1935. Since that time, the UI Act has been repealed
and replaced four times - in 1955, 1971, 1985, and most recently in 1996. Clarifying details
on how the act is to be applied are found in the EI Regulations, which are amended as
required.
</p>
<p>
The purpose of the act is to provide income support during a temporary interruption of
earnings with the emphasis on returning the unemployed to the labour force as quickly as
possible. Contributions to the plan and the amount of benefits are based on a percentage of
insurable earnings. The ceiling on insurable earnings is reviewed annually to keep pace with
increases in average income and the cost of living. The premium rates payable by an insured
employee and the employer are also determined annually.
</p>
</section>
<section id="service-canada">
<h3>
Service Canada
<a class="headerlink" href="#service-canada" title="Link to this heading">
&para;
</a>
</h3>
<p>
Service Canada (SC) was created by the federal government in 2005 with the goal of
providing easy-to-access, one-stop personalized service to Canadians. The agency integrates
services from a number of federal departments to form a service delivery network. These
services often touch all aspects of the lives of Canadians: from parental and pension benefits,
to matching employers with job seekers, and obtaining a Social Insurance Number.
Service Canada serves as the government&rsquo;s operational arm while Employment and Social
Development Canada (ESDC) operates as the policy-making body. ESDC makes the rules
for the various programs while Service Canada delivers the programs.
</p>
<p>
Some of Service Canada&rsquo;s program responsibilities include:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the issuance of Social Insurance Numbers (SIN) and the protection and security of SIN information
</p>
</li>
<li>
<p>
the delivery of services to employers, including Record of Employment on the Web the administration of Employment Insurance programs to individuals, including regular, illness, pregnancy/parental, critically ill or injured person and compassionate care benefits
</p>
</li>
<li>
<p>
the administration of the Employment Insurance Premium Reduction program, including granting qualified employers a reduced Employment Insurance premium rate
</p>
</li>
<li>
<p>
the administration of Canada Pension Plan benefits, including retirement, disability, survivor, children&rsquo;s and death benefits
</p>
</li>
<li>
<p>
the administration of benefits for seniors, including the Old Age Security Program and the Guaranteed Income Supplement
</p>
</li>
</ul>
</div>
</blockquote>
<p>
Through the Canada Pension Plan program, SC administers the payment of CPP benefits. These payments have little impact on payroll.
The biggest impact Service Canada has on
payroll is through the administration of the Record of Employment program and the Social
Insurance Number.
</p>
<p>
Payroll is responsible for deducting and remitting EI premiums on behalf of employees and
employers. They are also responsible for capturing information related to insurable earnings
and hours, and reporting that information on the Record of Employment, which is explained
in detail in a later chapter.
</p>
<section id="social-insurance-number-sin">
<h4>
Social Insurance Number (SIN)
<a class="headerlink" href="#social-insurance-number-sin" title="Link to this heading">
&para;
</a>
</h4>
</section>
</section>
<section id="statistics-canada">
<h3>
Statistics Canada
<a class="headerlink" href="#statistics-canada" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="personal-privacy">
<h3>
Personal Privacy
<a class="headerlink" href="#personal-privacy" title="Link to this heading">
&para;
</a>
</h3>
<section id="the-privacy-principles">
<h4>
The Privacy Principles
<a class="headerlink" href="#the-privacy-principles" title="Link to this heading">
&para;
</a>
</h4>
</section>
<section id="the-personal-information-protection-and-electronic-documents-act-pipeda">
<h4>
The Personal Information Protection and Electronic Documents Act (PIPEDA)
<a class="headerlink" href="#the-personal-information-protection-and-electronic-documents-act-pipeda" title="Link to this heading">
&para;
</a>
</h4>
</section>
</section>
<section id="pension-benefits-standards-act">
<h3>
Pension Benefits Standards Act
<a class="headerlink" href="#pension-benefits-standards-act" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="canadian-human-rights-act">
<h3>
Canadian Human Rights Act
<a class="headerlink" href="#canadian-human-rights-act" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="employment-equity-act">
<h3>
Employment Equity Act
<a class="headerlink" href="#employment-equity-act" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="summary">
<h3>
Summary
<a class="headerlink" href="#summary" title="Link to this heading">
&para;
</a>
</h3>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Under the Canada Pension Plan Act and the Employment Insurance Act, the Canada Revenue Agency is responsible for determining:
- whether or not an individual&rsquo;s employment is pensionable under the Canada Pension Plan Act or insurable under the Employment Insurance Act
- the types of earnings that are considered pensionable or insurable
- how many hours an insured person has in insurable employment
- the recovery of any debts owed as a result of an overpayment of Canada Pension Plan, Employment Insurance, or Old Age Security benefits
</p>
</li>
<li>
<p>
The Canada Revenue Agency is responsible for ensuring that Canada Pension Plan contributions and Employment Insurance premiums are deducted, remitted, and reported as required by legislation.
</p>
</li>
<li>
<p>
The Canada Revenue Agency collects provincial/territorial income taxes on behalf of all provinces/territories except Qu&eacute;bec.
</p>
</li>
<li>
<p>
Revenu Qu&eacute;bec collects the provincial income tax for the province of Qu&eacute;bec.
</p>
</li>
<li>
<p>
Employers who remit withholdings or deductions late, withhold the statutory deductions but do not remit them, or fail to deduct the required deductions will be subject to penalties, which may increase on subsequent occurrences, plus interest charges.
</p>
</li>
<li>
<p>
All monies deducted on behalf of the Canada Revenue Agency are considered to be held &ldquo;in trust&rdquo; for the Receiver General.
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="review-questions">
<h3>
Review Questions
<a class="headerlink" href="#review-questions" title="Link to this heading">
&para;
</a>
</h3>
<p>
1. What are the three main programs specifically related to payroll that the Canada
Revenue Agency administers?
</p>
<p>
2. If an organization deducts $27,400 in Canada Pension Plan contributions from its
employees and $21,200 in Employment Insurance premiums, how much would have to
be remitted in total to the Canada Revenue Agency?
</p>
<p>
3. True or False: The Canada Revenue Agency collects provincial/territorial income taxes
for all provinces and territories.
</p>
</section>
</section>
<span id="document-3_contracts">
</span>
<section id="employee-vs-independent-contractor">
<h2>
EMPLOYEE vs. INDEPENDENT CONTRACTOR
<a class="headerlink" href="#employee-vs-independent-contractor" title="Link to this heading">
&para;
</a>
</h2>
<section id="the-employee-employer-relationship">
<h3>
The Employee-Employer Relationship
<a class="headerlink" href="#the-employee-employer-relationship" title="Link to this heading">
&para;
</a>
</h3>
<p>
Determining the nature of the working relationship between an individual and an organization is essential in all employment situations. Whether the individual is classified as an employee or self-employed directly affects the statutory withholding requirements and the organization&rsquo;s compliance with applicable legislation. To support this assessment, the Canada Revenue Agency (CRA) provides a set of guidelines designed to help distinguish between the two classifications. Importantly, the decision is not made by the worker but must be based on objective criteria and legal standards.
</p>
<p>
Payroll practitioners play an important role in promoting awareness of this distinction throughout the organization. By proactively communicating the significance of establishing a valid employee-employer relationship, payroll professionals help ensure that employment classifications are accurate and compliant.
</p>
<p>
Once an employee-employer relationship is confirmed, the payroll department becomes responsible for meeting compliance obligations related to statutory withholdings. This includes deducting the appropriate amounts&mdash;such as income tax, Canada Pension Plan contributions, and Employment Insurance premiums&mdash;from employee pay and remitting them to the government within the required timelines. Proper classification and adherence to these rules are key to maintaining legal and financial accountability.
</p>
<p>
Where an employee-employer relationship exists, the CRA requires the employer to:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
register with the Canada Revenue Agency for a Business Number (BN)
</p>
</li>
<li>
<p>
withhold the statutory deductions of income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums on amounts paid to employees
</p>
</li>
<li>
<p>
remit the amounts withheld as well as the required employer&rsquo;s share of CPP contributions and EI premiums to the Canada Revenue Agency
</p>
</li>
<li>
<p>
report the employees&rsquo; income and deductions on the appropriate information return
</p>
</li>
<li>
<p>
give the employees copies of their T4 slips by the end of February of the following calendar year
</p>
</li>
</ul>
</div>
</blockquote>
<p>
Information on the factors to consider when determining whether an employee-employer relationship exists can be found in the
Canada Revenue Agency guide, Employee or Self-Employed? - RC4110. The guide is available on the CRA&rsquo;s website,
<a class="reference external" href="https://www.canada.ca/en/revenue-agency.html">
https://www.canada.ca/en/revenue-agency.html
</a>
.
</p>
<section id="contract-of-service-employment">
<h4>
Contract of Service (Employment)
<a class="headerlink" href="#contract-of-service-employment" title="Link to this heading">
&para;
</a>
</h4>
<p>
A
<strong>
contract of service
</strong>
is an arrangement whereby an individual (the employee) agrees to
work on a full-time or part-time basis for an employer for a specified or indeterminate period
of time.
</p>
<p>
Under a contract of service, one party serves another in return for a salary or some other form
of remuneration.
</p>
</section>
<section id="contract-for-service-subcontracting">
<h4>
Contract for Service (Subcontracting)
<a class="headerlink" href="#contract-for-service-subcontracting" title="Link to this heading">
&para;
</a>
</h4>
<p>
A
<strong>
contract for service
</strong>
is a business relationship whereby one party agrees to perform certain
specific work stipulated in the contract for another party. It usually calls for the
accomplishment of a clearly defined task but does not normally require that the contracting
party do anything him/herself. A person who carries out a contract for service may be
considered a contract worker, a self-employed person or an independent contractor.
</p>
<p>
A business relationship is formed when a self-employed individual enters into a verbal or written agreement to complete
specific work for a payer in exchange for compensation. This arrangement does not establish an employer-employee relationship;
instead, it represents a contract for services.
</p>
<p>
Under this type of agreement, the self-employed individual is responsible for delivering a final result within an agreed
timeframe, using methods of their own choosing. They are not subject to the direction or supervision of the payer while
completing the work, and they retain autonomy over how tasks are executed. In most cases, the payer does not participate in
or influence the work process, meaning control over the work lies entirely with the self-employed individual. This structure
reflects a high level of independence and flexibility, distinguishing it clearly from traditional employment relationships.
</p>
<p>
Under a contract for service, a self-employed individual accepts both the potential for profit and the risk of financial loss.
Prior to engagement, the individual agrees on the total cost of the work, uses personal tools and equipment, and assumes full
responsibility for how the work is performed. This means the individual bears any unforeseen costs or challenges that arise
during the project. Conversely, if the work is completed more efficiently than expected, the financial gain&mdash;through retained
profits&mdash;is greater.
</p>
<p>
Organizations often utilize contracts for service when they require tasks or projects that fall outside their normal business
operations. While the relationship between a payer and a self-employed contractor may resemble that of an employer and
employee, there is a key distinction. In a contract for service, the payer specifies the desired outcome or deliverable, but
not how the work should be completed. In contrast, a contract of service allows the employer to direct both the tasks and the
method by which they are carried out, establishing a more controlled, employee-based relationship.
</p>
<p>
Under a contract for service, the payer exercises general oversight to ensure that the agreed work is completed as specified.
However, this oversight does not extend to controlling how the work is performed. The self-employed individual retains
autonomy over the methods used to complete the tasks. Receiving general instructions from a project manager or similar
representative does not establish an employer-employee relationship.
</p>
<p>
An employee-employer relationship is recognized when an organization has the authority to direct and control both the work and
the manner in which it is performed. If there is uncertainty about whether such a relationship exists, the Canada Revenue
Agency (CRA) recommends submitting Form CPT1 &mdash; Request for a CPP/EI Ruling: Employee or Self-Employed? &mdash; to obtain
clarification. A sample of this form can be found at the end of this section.
</p>
<p>
Independent contractors or self-employed individuals are not classified as employees if no employer-employee relationship is
present. They typically submit invoices and receive payment through accounts payable. However, the act of submitting an
invoice alone is not sufficient to confirm self-employment status. Proper assessment of the working relationship is essential
sto ensure accurate classification and compliance with tax and labor regulations.
</p>
</section>
</section>
<section id="factors-determining-the-type-of-contract">
<h3>
Factors Determining the Type of Contract
<a class="headerlink" href="#factors-determining-the-type-of-contract" title="Link to this heading">
&para;
</a>
</h3>
<p>
The CRA uses a two-step approach to examine the relationship between the worker and the
payer for relationships outside the province of Qu&eacute;bec. The approach used for relationships
in the province of Qu&eacute;bec will be discussed in a later chapter.
</p>
<p>
<strong>
Step 1:
</strong>
The first step is to establish what the intent was when the worker and the payer entered into
the working arrangement. Did they intend to enter into an employee-employer relationship
(contract of service) or did they intend to enter into a business relationship (contract for
service). The CRA must determine not only how the working relationship has been defined
but why it was defined that way.
</p>
<p>
<strong>
Step 2:
</strong>
The CRA then considers certain factors when determining if a contract of service or a
contract for service exists. In order to understand the working relationship and verify that the
intent of the worker and the payer is reflected in the facts, they will ask a series of questions
that relate to the following factors:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the level of control the payer has over the worker
</p>
</li>
<li>
<p>
whether or not the worker provides the tools and equipment
</p>
</li>
<li>
<p>
whether the worker can subcontract the work or hire assistants
</p>
</li>
<li>
<p>
the degree of financial risk taken by the worker
</p>
</li>
<li>
<p>
the degree of responsibility for investment and management held by the worker
</p>
</li>
<li>
<p>
the worker&rsquo;s opportunity for profit
</p>
</li>
<li>
<p>
any other relevant factors, such as written contracts
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The CRA will look at the answers independently and then together and consider whether or
not they reflect the intent that was originally stated. Considered individually, the response to
each of these questions is not conclusive; however, when weighed together, certain
conclusions may be drawn. When there is no common intent, the CRA will decide if the
answers are more consistent with a contract of service or a contract for service.
Each of these factors will be discussed in the material and indicators showing whether the
worker is an employee or self-employed will be provided.
</p>
<section id="control">
<h4>
Control
<a class="headerlink" href="#control" title="Link to this heading">
&para;
</a>
</h4>
<p>
One of the key factors in determining a worker&rsquo;s status is the extent to which the payer has the ability, authority, or
right to control both what work is performed and how it is carried out. Equally important is the level of independence the
worker maintains in performing their duties.
</p>
<p>
In evaluating the relationship, both the payer&rsquo;s oversight of the worker&rsquo;s day-to-day activities and their overall
influence are assessed. However, it is the payer&rsquo;s right to exercise control&mdash;rather than whether that control is actively
used&mdash;that holds the most weight in determining the nature of the working relationship.
</p>
<p>
Worker is an
<em>
Employee
</em>
when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The relationship is one of subordination.
</p>
</li>
<li>
<p>
The payer will often direct, scrutinize, and effectively control many elements of how the work is performed.
</p>
</li>
<li>
<p>
The payer controls both the results of the work and the method used to do the work.
</p>
</li>
<li>
<p>
The payer determines what jobs the worker will do.
</p>
</li>
<li>
<p>
The worker receives training or direction from the payer on how to do the work.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
Worker is a
<em>
Self-Employed
</em>
when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Individual usually works independently, does not have anyone overseeing them.
</p>
</li>
<li>
<p>
The worker is usually free to work when and for whom they choose and may provide their services to different payers at the same time.
</p>
</li>
<li>
<p>
The worker can accept or refuse work from the payer.
</p>
</li>
<li>
<p>
The working relationship between the payer and the worker does not present a degree of continuity, loyalty, security, subordination, or integration.
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="tools-and-equipment">
<h4>
Tools and Equipment
<a class="headerlink" href="#tools-and-equipment" title="Link to this heading">
&para;
</a>
</h4>
<p>
Ownership of tools and equipment is not a definitive factor in determining the nature of a working relationship or the type
of contract in place. While self-employed individuals often use their own tools to fulfill contractual obligations&mdash;making
such ownership common in business relationships&mdash;this alone does not confirm self-employment. Employees may also be required
to supply their own tools, depending on the trade or occupation.
</p>
<p>
In typical employee-employer relationships, the employer provides the necessary equipment and assumes the costs associated
with its use, including maintenance, insurance, transportation, rental fees, and operational expenses such as fuel. However,
in certain industries&mdash;such as automotive repair, painting, carpentry, and technical fields like software development or
surveying&mdash;it is standard practice for employees to use their own tools or specialized instruments.
</p>
<p>
In contrast, self-employed individuals not only supply their own equipment but also bear the associated costs. Significant
financial investment in tools&mdash;especially those that require ongoing maintenance or replacement&mdash;can suggest a business
relationship, as these individuals assume both the potential for profit and the risk of loss.
</p>
<p>
Ultimately, the key consideration is the scale of the investment and the financial responsibility related to repairs,
replacement, and insurance, rather than mere ownership itself.
</p>
<p>
The worker is an employee when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The payer supplies most of the tools and equipment.
</p>
</li>
<li>
<p>
The payer retains the right of use over the tools and equipment provided to the worker.
</p>
</li>
<li>
<p>
The worker supplies the tools and equipment and the payer reimburses the worker for their use
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The worker is a self-employed individual when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker provides the tools and equipment required and is responsible for the cost of repairs, insurance and maintenance and retains the right over the use of these assets.
</p>
</li>
<li>
<p>
The worker supplies his or her own workspace, is responsible for the costs to maintain it, and does substantial work from that site.
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="subcontracting-work-or-hiring-assistants">
<h4>
Subcontracting Work or Hiring Assistants
<a class="headerlink" href="#subcontracting-work-or-hiring-assistants" title="Link to this heading">
&para;
</a>
</h4>
<p>
As subcontracting work or hiring assistants can affect a worker&rsquo;s chance of profit or risk of loss, this can help determine
the type of business relationship.
</p>
<p>
The worker is an employee when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker cannot hire helpers or assistants.
</p>
</li>
<li>
<p>
The worker must perform the services personally.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The worker is a self-employed individual when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker does not have to perform the service personally.
</p>
</li>
<li>
<p>
They can hire another party to complete the work, without consulting with the payer.
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="financial-risk">
<h4>
Financial Risk
<a class="headerlink" href="#financial-risk" title="Link to this heading">
&para;
</a>
</h4>
<p>
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&mdash;for example, travel or business-related costs.
</p>
<p>
In contrast, self-employed individuals often assume greater financial risk by covering recurring operational costs
regardless of whether active work is being performed. These may include equipment leasing, office space rental, or other
business overheads. While both employees and contractors may receive reimbursement for certain expenses, the CRA places
particular emphasis on identifying costs that are not reimbursed. The presence of such expenses may indicate a business
relationship, reflecting the independence and financial responsibility characteristic of self-employment.
</p>
<p>
The worker is an employee when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker is not usually responsible for any operating expenses.
</p>
</li>
<li>
<p>
The worker is not financially liable if he or she does not fulfill the obligations of the contract.
</p>
</li>
<li>
<p>
The payer determines and controls the method and amount of pay.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The worker is a self-employed individual when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker is financially liable if he or she does not fulfill the obligations of the contract.
</p>
</li>
<li>
<p>
The worker does not receive any protection or benefits from the payer.
</p>
</li>
<li>
<p>
The worker hires helpers to assist and pays them.
</p>
</li>
<li>
<p>
The worker advertises the services offered.
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="responsibility-for-investment-and-management">
<h4>
Responsibility for Investment and Management
<a class="headerlink" href="#responsibility-for-investment-and-management" title="Link to this heading">
&para;
</a>
</h4>
<p>
When assessing whether a business relationship exists, one important indicator is the worker&rsquo;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.
</p>
<p>
Another key factor is decision-making authority related to financial outcomes. When the worker independently makes business
decisions that influence their profit or loss&mdash;such as pricing, project selection, or service delivery methods&mdash;it further
supports the classification of a self-employed individual operating under a business arrangement. These characteristics
reflect the autonomy and financial risk typically associated with self-employment.
</p>
<p>
The worker is an employee when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker has no capital investment in the business.
</p>
</li>
<li>
<p>
The worker does not have a business presence.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The worker is a self-employed individual when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker has capital investment, manages his or her staff, hires and pays individuals to help perform the work, and has established a business presence.
</p>
</li>
</ul>
</div>
</blockquote>
</section>
<section id="opportunity-for-profit">
<h4>
Opportunity for Profit
<a class="headerlink" href="#opportunity-for-profit" title="Link to this heading">
&para;
</a>
</h4>
<p>
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
contractual obligations, they often incur and manage expenses, which directly influence their potential for profit.
</p>
<p>
In contrast, employees generally do not bear financial risk or benefit from profit. While commission-based employees may
increase their earnings through performance, this does not represent profit in the traditional sense, as it does not reflect
income earned beyond expenses. Moreover, employees do not typically share in a business&rsquo;s profits or losses.
</p>
<p>
When assessing worker classification, the Canada Revenue Agency (CRA) considers the extent to which the individual controls
their revenue and expenses. Another key factor is the method of payment: employees are usually compensated at a fixed rate
based on a consistent pay schedule (e.g., hourly, weekly, or annually). Self-employed individuals, however, are often paid a
flat rate for a specific job, especially when they absorb related costs&mdash;an arrangement that commonly signals a business
relationship.
</p>
<p>
The worker is an employee when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker is not in a position to realize a business profit or loss.
</p>
</li>
<li>
<p>
The worker is entitled to benefit plans that are normally only offered to employees.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The worker is a self-employed individual when:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The worker is compensated by a flat fee.
</p>
</li>
<li>
<p>
The worker can hire and pay a substitute.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The worker is an employee when:
</p>
<p>
The worker is a self-employed individual when:
</p>
</section>
</section>
<section id="review-summary">
<h3>
Review Summary
<a class="headerlink" href="#review-summary" title="Link to this heading">
&para;
</a>
</h3>
<p>
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&mdash;either on a full-time or part-time
basis&mdash;for a specified or ongoing period. The employer has authority over both the duties and how they are executed.
</p>
<p>
Conversely, a contract for service reflects a business arrangement where an independent contractor agrees to perform specific
tasks, with discretion over how the work is completed. This signifies a client-provider relationship rather than an employment
one.
</p>
<p>
To assess worker classification&mdash;particularly outside Qu&eacute;bec&mdash;the Canada Revenue Agency (CRA) employs a two-step evaluation. Key
considerations include:
</p>
<p>
Control: Whether the payer holds the right to determine what work is done and how it is executed.
</p>
<p>
Independence: The degree of autonomy exercised by the worker.
</p>
<p>
Ownership of Tools: Significant investment in tools and equipment, along with maintenance and insurance responsibilities, may indicate a business relationship.
</p>
<p>
Financial Risk: Ongoing operational costs or unreimbursed expenses reflect a higher likelihood of self-employment.
</p>
<p>
Revenue Control: The ability to manage pricing, accept multiple contracts, and influence earnings supports classification under a contract for service.
</p>
<p>
Collectively, these factors guide proper categorization for legal and tax purposes, helping organizations ensure compliance and mitigate potential risk.
</p>
</section>
<section id="review-questions">
<h3>
Review Questions
<a class="headerlink" href="#review-questions" title="Link to this heading">
&para;
</a>
</h3>
<p>
What is the primary objective of the payroll department?
</p>
<blockquote>
<div>
<p>
The primary objective of the payroll department is to pay employees accurately and
on time, in compliance with the legislative requirements for a full annual payroll
cycle.
</p>
</div>
</blockquote>
<p>
List four definitions of payroll.
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the department that administers the payroll
</p>
</li>
<li>
<p>
the total number of people employed by an organization
</p>
</li>
<li>
<p>
the wages and salaries paid out in a year
</p>
</li>
<li>
<p>
a list of employees to be paid and the amount due to each
</p>
</li>
</ul>
</div>
</blockquote>
<p>
List the three types of payroll management stakeholders and provide an example of each.
</p>
<blockquote>
<div>
<p>
Payroll management stakeholders are government (federal and provincial/territorial), internal
(employees, employers and other departments) and external (benefit carriers, courts, unions, pension
providers, charities, third party administrators and outsource/software vendors).
</p>
</div>
</blockquote>
<p>
Explain the difference between legislation and regulation.
</p>
<blockquote>
<div>
<p>
Legislation determines what the rules are, while regulations determine how the rules are to be applied.
</p>
</div>
</blockquote>
<p>
What are two examples of sources of information that you use (or could use) to keep upto-date on payroll compliance changes?
</p>
<blockquote>
<div>
<p>
The Canadian Payroll Association offers Payroll InfoLine, a phone-in and e-mail information service for members
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
The Canada Revenue Agency (CRA) produces guides, publications and Income Tax Bulletins, folios and Circulars, posts news bulletins and enables
</p>
</li>
</ul>
<p>
participation on an electronic mailing list with e-mail alerts for new content to the site
- The Revenu Qu&eacute;bec (RQ) website provides guides, publications, bulletins, forms, online services and enables participation on an electronic mailing list with e-mail notifications of tax news articles
- Employment/labour standards (federal, provincial and territorial) publications and websites
- Employment and Social Development Canada (ESDC) and Service Canada (SC) publications including information regarding the Employment Insurance (EI) program and the Social Insurance Number
- CCH Canada Limited publishes a series of volumes on employment and labour law, pensions and benefits, etc., that supplies information on legislation with regular updates as changes become law
- Carswell publishes The Canadian Payroll Manual and offers a phone-in service to subscribers
</p>
</div>
</blockquote>
<p>
Copies of legislation are available from the printing offices of the federal, provincial and territorial governments as well as through government websites.
</p>
</div>
</blockquote>
<p>
List three external stakeholders and explain their compliance requirements.
</p>
<blockquote>
<div>
<p>
Benefit Carriers - Payroll is responsible for deducting and remitting premiums for the insurance coverage to the carriers and for providing reports on employee enrolment and coverage levels.
Courts and the CRA - Payroll must accurately deduct and remit amounts ordered to be withheld through garnishments, third party demands, requirements to pay and support deduction orders.
Unions - Payroll must accurately deduct and remit union dues and initiation fees, and ensure that the terms of the collective agreement are adhered to.
Pension Providers - Third party pension plan providers may require payroll to provide enrolment reports on participating employees and length of service calculations, and to remit employee deductions and employer contributions.
</p>
</div>
</blockquote>
<p>
Indicate the jurisdiction the following employees fall under:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Canada Post Corporation (F)
</p>
</li>
<li>
<p>
An insurance company (P)
</p>
</li>
<li>
<p>
A uranium mining company (F)
</p>
</li>
<li>
<p>
Canadian Broadcasting Corporation (F)
</p>
</li>
<li>
<p>
A retail department store with locations in every province (P)
</p>
</li>
<li>
<p>
A chartered bank (F)
</p>
</li>
</ul>
</div>
</blockquote>
<p>
What is the difference between a contract of service and a contract for service?
</p>
<blockquote>
<div>
<p>
A contract of service is an arrangement whereby an individual (the employee) agrees to work on a full-time or part-time basis for an employer for a specified or indeterminate period of time.
</p>
<p>
A contract for service is a business relationship whereby one party agrees to perform certain specific work stipulated in the contract for another party.
</p>
</div>
</blockquote>
<p>
What are the factors that the Canada Revenue Agency (CRA) considers when
determining if a contract of service or a contract for service exists?
</p>
<p>
Please consider the following scenario.
</p>
<blockquote>
<div>
<p>
You are a payroll professional working for a large manufacturing company. Your
organization has had many change initiatives over the last number of years including
three mergers and two large group terminations. Your company endorses the use of
consultants rather than growing the number of permanent employees.
</p>
<p>
Write a memo to your supervisor, who is the Chief Financial Officer of the company, to
explain why your role must coordinate with the Accounts Payable Department to ensure
that these payments are being handled correctly. Please prepare your answer in a separate
document.
</p>
<p>
<em>
At the last weekly Finance meeting, Tom and I discussed the increase in the number of contractor invoices being
processed through accounts payable (AP). We have some concerns as to whether these individuals would be considered truly
selfemployed by the Canada Revenue Agency (CRA), or whether the CRA would determine them to be employees.
</em>
</p>
<p>
<em>
If the worker is considered self-employed, then payment, on submission of an invoice, will continue to be handled by AP. If, however, the worker is considered an
employee, they would have to be set up on payroll, as they would be in receipt of income from employment, subject to all legislated statutory withholdings.
</em>
</p>
<p>
<em>
I have attached the CRA&rsquo;s form Request for a CPP/EI Ruling - Employee or SelfEmployed? - CPT1 for your information. This form can be completed by the
company and sent with supporting documentation, such as the terms and conditions of the contract, for a ruling from the CRA on the individual&rsquo;s status.
</em>
</p>
<p>
<em>
I think that Payroll must coordinate with the Accounts Payable Department to ensure that these payments are being handled correctly.
</em>
</p>
<p>
<em>
Tom and I would be pleased to meet with you to ensure the company is in
compliance with all legislative requirements. Would you be available next Friday
morning at 10:00 to discuss?
</em>
</p>
</div>
</blockquote>
</section>
</section>
<span id="document-cpp-and-ei">
</span>
<p>
Membership or participation in the Canada Pension Plan (CPP) and Employment Insurance
Plan (EI) is compulsory for certain types of employment. As a person responsible for the payroll
you need to know which employees must participate in these plans, what amounts to withhold
from employees and how much the employer will have to remit or send to the Canada
Revenue Agency (CRA).
</p>
<p>
Payroll plays a pivotal role in administering statutory deductions, specifically the collection and remittance of
Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums. These mandatory deductions, along with the
employer&rsquo;s matching portion, must be accurately submitted to the Canada Revenue Agency (CRA) within prescribed timelines.
</p>
<p>
This chapter outlines the essential criteria used to identify pensionable and insurable earnings, and provides detailed
guidance on calculating both employee deductions and employer contributions for regular and non-regular pay periods.
</p>
<p>
In accordance with federal legislation, CPP contributions are the
<strong>
first deduction
</strong>
applied to employment income,
followed by EI premiums. Because these deductions are mandated by statute, they are classified as
<strong>
statutory deductions
</strong>
,
underscoring their legal significance and the employer&rsquo;s obligation to ensure full compliance.
</p>
<p>
<strong>
Learning Objectives
</strong>
</p>
<p>
Upon completion of this chapter, you should be able to explain:
</p>
<blockquote>
<div>
<ol class="arabic simple">
<li>
<p>
The requirements and calculations for Canada Pension Plan contributions
</p>
</li>
<li>
<p>
The requirements and calculations for Employment Insurance premiums
</p>
</li>
<li>
<p>
What Service Canada uses the information on a Record of Employment for
</p>
</li>
</ol>
</div>
</blockquote>
<p>
This chapter will cover the following topics:
</p>
<blockquote>
<div>
<ol class="arabic simple">
<li>
<p>
Identify the following Canada Pension Plan components:
</p>
</li>
</ol>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Who must contribute to the Canada Pension Plan
</p>
</li>
<li>
<p>
Types of employment subject to Canada Pension Plan contributions
</p>
</li>
<li>
<p>
Types of employment not subject to Canada Pension Plan contributions
</p>
</li>
<li>
<p>
Payments and benefits subject to Canada Pension Plan contributions
</p>
</li>
<li>
<p>
Payments and benefits not subject to Canada Pension Plan contributions
</p>
</li>
</ul>
</div>
</blockquote>
<ol class="arabic simple" start="2">
<li>
<p>
Calculate Canada Pension Plan contributions at an individual level
</p>
</li>
<li>
<p>
Identify the following Employment Insurance components:
</p>
</li>
</ol>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Who must pay Employment Insurance premiums
</p>
</li>
<li>
<p>
Types of employment subject to Employment Insurance premiums
</p>
</li>
<li>
<p>
Types of employment not subject to Employment Insurance premiums
</p>
</li>
<li>
<p>
Payments and benefits subject to Employment Insurance premiums
</p>
</li>
<li>
<p>
Payments and benefits not subject to Employment Insurance premiums
</p>
</li>
</ul>
</div>
</blockquote>
<ol class="arabic simple" start="4">
<li>
<p>
Calculate Employment Insurance premiums at an individual level
</p>
</li>
<li>
<p>
Describe the purpose of a Record of Employment
</p>
</li>
<li>
<p>
Identify when the Record of Employment must be completed
</p>
</li>
</ol>
</div>
</blockquote>
<section id="canada-pension-plan">
<h2>
Canada Pension Plan
<a class="headerlink" href="#canada-pension-plan" title="Link to this heading">
&para;
</a>
</h2>
<p>
Objective of this section is to enable you to identify the following Canada Pension Plan components:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Who must contribute to the Canada Pension Plan
</p>
</li>
<li>
<p>
Types of employment subject to Canada Pension Plan contributions
</p>
</li>
<li>
<p>
Types of employment not subject to Canada Pension Plan contributions
</p>
</li>
<li>
<p>
Payments and benefits subject to Canada Pension Plan contributions
</p>
</li>
<li>
<p>
Payments and benefits not subject to Canada Pension Plan contributions
</p>
</li>
<li>
<p>
Calculate Canada Pension Plan contributions at an individual level
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The
<strong>
Canada Pension Plan
</strong>
(CPP) is a federally legislated social insurance program established under the Canada Pension Plan
Act. Its primary purpose is to provide financial protection to contributors and their families in the event of retirement,
disability, or death. The program is funded through mandatory payroll deductions from employees, which are matched equally by
employers. These employee contributions are specifically referred to as Canada Pension Plan contributions.
</p>
<p>
In addition to the CPP, employers may offer private or non-government pension plans, which may also involve payroll
deductions from employees. The specific payroll withholding requirements for these supplementary pension plans will be discussed
in more detail in the later chapters; it is important to note that the CPP is often one of multiple retirement savings
vehicles available within an organization&rsquo;s compensation structure.
</p>
<div class="admonition note">
<p class="admonition-title">
Note
</p>
<p>
Employers located in Quebec are responsible for deducting Qu&eacute;bec Pension Plan (QPP) contributions, instead
of CPP contributions, from their Qu&eacute;bec employees and remitting those contributions to Revenu Qu&eacute;bec (RQ).
</p>
</div>
<p>
The Canada Pension Plan (CPP) was designed as an income replacement program for individuals who have been in pensionable
employment during their working life. A CPP retirement pension is a monthly benefit paid to people who have contributed to
the Canada Pension Plan. The pension is designed to replace about 25 percent of the earnings on which a person&rsquo;s contributions
were based. Individuals can apply for their CPP retirement pension when they turn 60.
</p>
<p>
There are three Canada Pension Plan benefits:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
retirement pension
</p>
</li>
<li>
<p>
disability benefits (for contributors with a disability and their dependent children)
</p>
</li>
<li>
<p>
survivor benefits (including the death benefit, the survivor&rsquo;s pension and the children&rsquo;s benefit)
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The CPP operates throughout Canada while the province of Qu&eacute;bec administers its own program for workers in Qu&eacute;bec called the
<strong>
Qu&eacute;bec Pension Plan
</strong>
(QPP). The two plans work together to ensure that all contributors are protected, no matter where the
individual lives. Qu&eacute;bec Pension Plan requirements will be covered later in this course.
</p>
<section id="who-must-contribute-to-the-canada-pension-plan">
<h3>
Who Must Contribute to the Canada Pension Plan
<a class="headerlink" href="#who-must-contribute-to-the-canada-pension-plan" title="Link to this heading">
&para;
</a>
</h3>
<p>
The CPP is a
<strong>
contributory plan
</strong>
. This means that all costs are covered by the financial contributions paid by employees,
employers and self-employed workers, and from revenue earned on CPP investments. The CPP is not funded through general tax
revenues.
</p>
<p>
Canada Pension Plan contributions must be withheld from employees who:
</p>
<blockquote>
<div>
<ol class="arabic simple">
<li>
<p>
CPP contributions must be withheld from employees who have reached the age of 18 but are under the age of 70.
</p>
</li>
<li>
<p>
CPP contributions must be withheld from employees who are in pensionable employment.
</p>
</li>
<li>
<p>
CPP contributions must be withheld from employees in pensionable employment who are not considered to be disabled by either Service Canada or Retraite Qu&eacute;bec.
</p>
</li>
</ol>
<p>
4. CPP contributions must be withheld from employees who are 65 years of age but are under the age of 70 and are in receipt of the Canada or Qu&eacute;bec Pension Plan retirement
pension, but have not filed an election to stop paying CPP contributions.
</p>
</div>
</blockquote>
<p>
In principle, employees who do not fall within the categories listed previously would not make CPP contributions. However, it
is not always clear what constitutes pensionable earnings and pensionable employment. To clarify eligibility, the CRA has
developed a list of the types of employment that are not subject to CPP contributions. This information can also be found in
the Employers&rsquo; Guide - Payroll Deductions and Remittances - T4001, which is published by the CRA.
</p>
<p>
The following types of employment are excluded by legislation and therefore do not constitute pensionable employment. Payments arising from such employment are not subject
to CPP contributions:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
employment in agriculture, or an agricultural enterprise, horticulture, fishing, hunting, trapping, forestry, logging, or lumbering, by an employer:
</p>
<ul>
<li>
<p>
who pays the employee less than $250 in cash remuneration in a calendar year; or
</p>
</li>
<li>
<p>
employs the employee for a period of less than 25 working days in the same year on terms providing for payment of cash remuneration&mdash;the working days do not have to be consecutive
</p>
</li>
</ul>
</li>
<li>
<p>
employment of a casual nature other than for the purpose of the employer&rsquo;s usual trade or business
</p>
</li>
<li>
<p>
employment of a person, other than as an entertainer, in connection with a circus, fair, parade, carnival, exposition, exhibition, or other similar activity, if that person is:
</p>
<ul>
<li>
<p>
not regularly employed by that employer, and
</p>
</li>
<li>
<p>
employed by that employer for less than seven days in a year
</p>
</li>
</ul>
</li>
<li>
<p>
employment of a person by a government body as an election worker, if that person:
</p>
<ul>
<li>
<p>
is not a regular employee of the government body, and
</p>
</li>
<li>
<p>
works for less than 35 hours in a calendar year
</p>
</li>
</ul>
</li>
<li>
<p>
employment as a teacher on exchange from a foreign country
</p>
</li>
<li>
<p>
employment of a spouse or common-law partner if the employer cannot deduct the remuneration paid as an expense under the Income Tax Act
</p>
</li>
<li>
<p>
employment of a member of a religious order who has taken a vow of perpetual poverty. This applies whether the remuneration is paid directly to the order or paid by the member to the order.
</p>
</li>
<li>
<p>
employment for which no cash remuneration is paid, where the employee is the child of, or is maintained by, the employer
</p>
</li>
<li>
<p>
employment of a person who helps the employer in a disaster or in a rescue operation if the employee is not regularly employed by the employer
</p>
</li>
</ul>
</div>
</blockquote>
</section>
</section>
<section id="employment-insurance">
<h2>
Employment Insurance
<a class="headerlink" href="#employment-insurance" title="Link to this heading">
&para;
</a>
</h2>
<p>
Objective of this section is to enable you to identify the following Employment Insurance components:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Who must pay Employment Insurance premiums
</p>
</li>
<li>
<p>
Types of employment subject to Employment Insurance premiums
</p>
</li>
<li>
<p>
Types of employment not subject to Employment Insurance premiums
</p>
</li>
<li>
<p>
Payments and benefits subject to Employment Insurance premiums
</p>
</li>
<li>
<p>
Payments and benefits not subject to Employment Insurance premiums
</p>
</li>
<li>
<p>
Calculate Employment Insurance premiums at an individual level
</p>
</li>
</ul>
</div>
</blockquote>
<p>
<strong>
Employment Insurance
</strong>
(EI) is a federally legislated social insurance program established under the Employment Insurance Act.
It provides temporary financial support to individuals who are unemployed while seeking new employment or engaging in skill
development. In addition to regular benefits, EI offers special provisions for workers who take leave due to significant life
events such as illness, pregnancy, caring for a newborn or newly adopted child, supporting a critically ill or injured person,
or tending to a family member facing a serious health condition with a risk of death.
</p>
<p>
The EI program is funded through payroll contributions made by employees, known as Employment Insurance premiums. Employers
also contribute by paying a premium that is calculated based on their employees&rsquo; deductions.
</p>
<p>
While Employment Insurance is a government-mandated program, it may not be the only insurance plan available in the workplace.
Many organizations offer private or non-government insurance options such as life and disability coverage, which are funded by
employers, employees, or both. Although this chapter focuses specifically on the federally legislated EI program, additional
information about private insurance plans will be covered in the later chapters.
</p>
</section>
<section id="record-of-employment">
<h2>
Record of Employment
<a class="headerlink" href="#record-of-employment" title="Link to this heading">
&para;
</a>
</h2>
<p>
The
<strong>
Record of Employment
</strong>
(ROE) is the form used by Service Canada to determine an individual&rsquo;s qualification to collect
Employment Insurance benefits when their employment is interrupted, how much the benefit will be and how long they will
collect it. As payroll is responsible for completing the ROE, the form will be illustrated in this chapter, along with an
explanation of what payroll information must be tracked for ROE reporting purposes.
</p>
</section>
<span id="document-compensation">
</span>
<section id="calculating-net-earnings">
<h2>
CALCULATING NET EARNINGS
<a class="headerlink" href="#calculating-net-earnings" title="Link to this heading">
&para;
</a>
</h2>
<section id="employment-income">
<h3>
Employment Income
<a class="headerlink" href="#employment-income" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="allowances">
<h3>
Allowances
<a class="headerlink" href="#allowances" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="expenses">
<h3>
Expenses
<a class="headerlink" href="#expenses" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="benefits">
<h3>
Benefits
<a class="headerlink" href="#benefits" title="Link to this heading">
&para;
</a>
</h3>
</section>
</section>
<span id="document-onboarding_employee">
</span>
<section id="obnoarding-employee">
<h2>
OBNOARDING EMPLOYEE
<a class="headerlink" href="#obnoarding-employee" title="Link to this heading">
&para;
</a>
</h2>
<p>
In the context of Canadian payroll administration, onboarding an employee refers to the formal process of integrating a new hire into
both the organizational and payroll systems. It ensures that the employee is properly registered, legally compliant, and ready to be paid
accurately and on time.
</p>
<p>
Key Steps on Onboarding an Employee:
</p>
<ul class="simple">
<li>
<p>
Collect Required Personal Information: Includes full legal name, address, date of birth, and Social Insurance Number (SIN). The SIN is
</p>
</li>
</ul>
<p>
critical for tax reporting to the CRA (Canada Revenue Agency).
</p>
<ul class="simple">
<li>
<p>
Obtain Federal &amp; Provincial Tax Forms: New employees must complete Form TD1 (Federal and possibly a Provincial version) to declare tax
</p>
</li>
</ul>
<p>
credits and determine income tax withholdings.
</p>
<ul class="simple">
<li>
<p>
Set Up Banking Info for Direct Deposit: Employees usually provide a void cheque or bank form to set up electronic payments.
</p>
</li>
<li>
<p>
Register the Employee in the Payroll System: Involves entering all personal and job-related data, assigning a payroll ID, and verifying
</p>
</li>
</ul>
<p>
employment status (e.g. full-time, part-time, contract).
</p>
<ul class="simple">
<li>
<p>
Enroll in Benefits or Pension Programs: If applicable, the employee may be signed up for group insurance, retirement savings plans (like
</p>
</li>
</ul>
<p>
RRSP or pension plans), and other benefits. These deductions must be accurately reflected in payroll.
</p>
<ul>
<li>
<p>
Assign Statutory Deductions that Employers must withhold and remit
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
CPP (Canada Pension Plan)
</p>
</li>
<li>
<p>
EI (Employment Insurance)
</p>
</li>
<li>
<p>
Income Tax (based on TD1 form)
</p>
</li>
</ul>
</div>
</blockquote>
</li>
<li>
<p>
Confirm Employment Agreement &amp; Start Date
</p>
</li>
</ul>
<p>
Compliance &amp; Record Keeping
</p>
<ul class="simple">
<li>
<p>
Employers in Canada are responsible for keeping accurate records of employee data, pay stubs, deductions, and remittances for
</p>
</li>
</ul>
<p>
at least 6 years.
</p>
<ul class="simple">
<li>
<p>
If audited by CRA, these documents must be readily available.
</p>
</li>
<li>
<p>
Employers must also provide T4 slips by end of February each year to summarize annual earnings and deductions for tax filing.
</p>
</li>
</ul>
<blockquote>
<div>
<p>
Employment Standards Requirements
</p>
</div>
</blockquote>
<hr class="docutils"/>
<p>
Each province/territory, as well as the federal government, sets minimum employment standards, including:
</p>
<ul class="simple">
<li>
<p>
Minimum wage
</p>
</li>
<li>
<p>
Minimum age (may also be governed by other legislation)
</p>
</li>
<li>
<p>
Required pay statement information:
- Employee name
- Pay period date
- Rates of pay and hours worked
- Gross earnings
- Itemized deductions
- Net pay
</p>
</li>
</ul>
<section id="internal-forms">
<h3>
Internal Forms
<a class="headerlink" href="#internal-forms" title="Link to this heading">
&para;
</a>
</h3>
<p>
Typical commencement package forms include:
</p>
<ul class="simple">
<li>
<p>
Authorization for hiring
</p>
</li>
<li>
<p>
Direct deposit agreement
</p>
</li>
<li>
<p>
Union membership application
</p>
</li>
<li>
<p>
Benefits enrollment (e.g., health/dental, pension)
</p>
</li>
<li>
<p>
Confidentiality agreement
</p>
</li>
</ul>
<section id="authorization-for-hiring">
<h4>
Authorization for Hiring
<a class="headerlink" href="#authorization-for-hiring" title="Link to this heading">
&para;
</a>
</h4>
<p>
This internal document includes:
</p>
<ul class="simple">
<li>
<p>
New employee&rsquo;s basic info
</p>
</li>
<li>
<p>
Start date, department, salary
</p>
</li>
<li>
<p>
Probation details
</p>
</li>
<li>
<p>
Hiring authority&rsquo;s signature
</p>
</li>
</ul>
<p>
<strong>
Important:
</strong>
Employer must obtain a valid SIN. A SIN starting with 9 must have a valid expiry date and associated work permit.
</p>
</section>
<section id="union-membership">
<h4>
Union Membership
<a class="headerlink" href="#union-membership" title="Link to this heading">
&para;
</a>
</h4>
<p>
For unionized workplaces:
</p>
<ul class="simple">
<li>
<p>
Amount of union dues to be deducted
</p>
</li>
<li>
<p>
Employees signature authorization for deduction
</p>
</li>
<li>
<p>
Exemptions may apply, but dues equivalent still required
</p>
</li>
</ul>
</section>
<section id="benefit-enrollment-forms">
<h4>
Benefit Enrollment Forms
<a class="headerlink" href="#benefit-enrollment-forms" title="Link to this heading">
&para;
</a>
</h4>
<p>
Forms cover group insurance and pension plans:
</p>
<ul class="simple">
<li>
<p>
Employee indicates coverage type
</p>
</li>
<li>
<p>
Signatures authorize payroll deductions
</p>
</li>
</ul>
</section>
<section id="confidentiality-agreement">
<h4>
Confidentiality Agreement
<a class="headerlink" href="#confidentiality-agreement" title="Link to this heading">
&para;
</a>
</h4>
<p>
A legally binding agreement protecting sensitive company info:
</p>
<ul class="simple">
<li>
<p>
Defines proprietary data
</p>
</li>
<li>
<p>
Outlines responsibilities, penalties, and timeframe
</p>
</li>
</ul>
</section>
</section>
<section id="required-federal-and-provincial-territorial-forms">
<h3>
Required Federal and Provincial/Territorial Forms
<a class="headerlink" href="#required-federal-and-provincial-territorial-forms" title="Link to this heading">
&para;
</a>
</h3>
<p>
<strong>
Purpose:
</strong>
Determine correct income tax withholdings.
</p>
<p>
Forms:
</p>
<ul class="simple">
<li>
<p>
TD1 (Federal)
</p>
</li>
<li>
<p>
TD1 (Provincial/Territorial)
</p>
</li>
<li>
<p>
TP-1015.3-V (Qu&eacute;bec employees)
</p>
</li>
</ul>
<p>
<strong>
Provincial/territorial withholding
</strong>
is based on
<em>
province of employment
</em>
, but tax liability is based on
<em>
province of residence
</em>
.
</p>
<p>
<strong>
Adjustments:
</strong>
</p>
<ul class="simple">
<li>
<p>
Request extra withholding via TD1 or TP-1015.3-V
</p>
</li>
<li>
<p>
Request reduction using CRA Form T1213 or RQ Form TP-1016-V
</p>
</li>
</ul>
<p>
Essential Info on All Forms:
</p>
<ul class="simple">
<li>
<p>
Employee name
</p>
</li>
<li>
<p>
Date of birth
</p>
</li>
<li>
<p>
Social Insurance Number
</p>
</li>
</ul>
<section id="tax-credits-td1">
<h4>
Tax Credits (TD1)
<a class="headerlink" href="#tax-credits-td1" title="Link to this heading">
&para;
</a>
</h4>
<ol class="arabic simple">
<li>
<p>
Basic personal amount
</p>
</li>
<li>
<p>
Canada caregiver (infirm children)
</p>
</li>
<li>
<p>
Age amount
</p>
</li>
<li>
<p>
Pension income
</p>
</li>
<li>
<p>
Tuition
</p>
</li>
<li>
<p>
Disability
</p>
</li>
<li>
<p>
Spouse/common-law partner amount
</p>
</li>
<li>
<p>
Eligible dependant
</p>
</li>
<li>
<p>
Caregiver for infirm spouse or dependant
</p>
</li>
<li>
<p>
Caregiver for dependant age 18+
</p>
</li>
<li>
<p>
Transfers from spouse
</p>
</li>
<li>
<p>
Transfers from dependant
</p>
</li>
<li>
<p>
Total
</p>
</li>
</ol>
<p>
Additional Instructions:
</p>
<ul class="simple">
<li>
<p>
Fill out TD1 only if claiming more than basic credit
</p>
</li>
<li>
<p>
Qu&eacute;bec employees must always complete TP-1015.3-V
</p>
</li>
</ul>
</section>
<section id="tax-credits-tp-1015-3-v-quebec">
<h4>
Tax Credits (TP-1015.3-V - Qu&eacute;bec)
<a class="headerlink" href="#tax-credits-tp-1015-3-v-quebec" title="Link to this heading">
&para;
</a>
</h4>
<ul class="simple">
<li>
<p>
Basic amount
</p>
</li>
<li>
<p>
Transfer from spouse
</p>
</li>
<li>
<p>
Amount for dependants
</p>
</li>
<li>
<p>
Impairment in mental/physical function
</p>
</li>
<li>
<p>
Age amount, retirement income, living alone
</p>
</li>
<li>
<p>
Career extension
</p>
</li>
</ul>
<p>
Deductions:
</p>
<ul class="simple">
<li>
<p>
Remote area housing
</p>
</li>
<li>
<p>
Deductible support payments
</p>
</li>
</ul>
</section>
</section>
<section id="entering-employee-information-into-sage50">
<h3>
Entering Employee Information into Sage50
<a class="headerlink" href="#entering-employee-information-into-sage50" title="Link to this heading">
&para;
</a>
</h3>
<p>
To enter a new employee into the Sage 50 Payroll module (Canada edition), start by navigating to the Employees &amp; Payroll section in the
Home window. Right-click the Employees icon and choose &ldquo;Add Employee&rdquo; to begin creating employee&rsquo;s record. Input the employee&rsquo;s full legal
name. Then, proceed to fill in the personal and payroll details across several tabs: the Personal tab for birth date and contact info, the Taxes tab to select the appropriate provincial
tax table, the Income tab to configure their pay frequency, and the Deductions tab to define benefit or pension deductions. You&rsquo;ll also
want to enter their bank details for direct deposit. For compliance, be sure to complete and store signed TD1 forms (Federal and Provincial)
separately, as Sage50 does not automatically generate these. You&rsquo;ll also need to set up EI, CPP, and Income Tax deductions and link them to remittance vendors in the system. Once all
information is reviewed for accuracy, save and close the record to finalize setup. If you prefer a guided approach, Sage50 also offers
an Employee Wizard to walk you through these steps.
</p>
<div class="admonition important">
<p class="admonition-title">
Important
</p>
<p>
To maintain accuracy and compliance in Sage 50 Payroll, carefully verify that all employee information entered into the system,
including full legal name, Social Insurance Number (SIN), residential address, and compensation details, matches the data provided on
official documentation such as the signed employment contract and government-issued identification (e.g. driver&rsquo;s licence, Employment Contract).
Double-checking these entries helps prevent administrative errors and ensures that payroll records remain consistent with legal and
regulatory standards.
</p>
</div>
<img alt="_images/onboarding-employee_001.png" src="_images/onboarding-employee_001.png"/>
<img alt="_images/onboarding-employee_002.png" src="_images/onboarding-employee_002.png"/>
<img alt="_images/onboarding-employee_003.png" src="_images/onboarding-employee_003.png"/>
<img alt="_images/onboarding-employee_004.png" src="_images/onboarding-employee_004.png"/>
<img alt="_images/onboarding-employee_005.png" src="_images/onboarding-employee_005.png"/>
<img alt="_images/onboarding-employee_006.png" src="_images/onboarding-employee_006.png"/>
<section id="review-questions">
<h4>
Review Questions
<a class="headerlink" href="#review-questions" title="Link to this heading">
&para;
</a>
</h4>
<ol class="arabic">
<li>
<p>
What is the significance of accurately entering the &ldquo;Date Hired&rdquo; field when setting up a new employee profile in Sage 50?
</p>
<p>
<em>
Accurately entering the &ldquo;Date Hired&rdquo; in Sage 50 is a critical step in ensuring the integrity of payroll records and overall HR
compliance. This field defines the employee&rsquo;s official start date, which determines pay cycle alignment, benefit entitlement periods,
and the correct application of mandatory deductions such as CPP and EI. It also plays a pivotal role in historical payroll
reporting&mdash;including audit readiness and the generation of year-end T4 slips. Furthermore, the hire date is essential when preparing a
Record of Employment (ROE), as it establishes the starting point for the employee&rsquo;s insurable earnings and service duration.
</em>
</p>
</li>
</ol>
<p>
2. Within the scope of Payroll Administration, how should the department ethically and legally respond when a supervisor requests access
to an employee&rsquo;s date of birth for the purpose of workplace recognition, given that this personal information is already held by payroll?
</p>
<blockquote>
<div>
<p>
<em>
Under Canadian payroll administration and the Personal Information Protection and Electronic Documents Act (PIPEDA), sharing an
employee&rsquo;s date of birth &mdash; even for positive intentions like workplace recognition, is not legally or ethically appropriate.
</em>
</p>
<p>
<em>
PIPEDA requires employers to:
</em>
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
Limit the collection, use, and disclosure of personal information to what is necessary for clearly identified business purposes.
</p>
</li>
<li>
<p>
Obtain meaningful consent before using personal data for any purpose beyond what it was originally collected for&mdash;such as payroll or benefits administration.
</p>
</li>
<li>
<p>
Protect employee privacy by restricting access to personal information on a strict need-to-know basis.
</p>
</li>
</ul>
</div>
</blockquote>
<p>
<em>
In this case, using the date of birth for celebrations or acknowledgments is outside the scope of payroll processing. Even if the
Payroll department holds this information, it cannot be disclosed to supervisors or other staff.
</em>
</p>
</div>
</blockquote>
</section>
</section>
<section id="content-review-highlights">
<h3>
Content Review Highlights
<a class="headerlink" href="#content-review-highlights" title="Link to this heading">
&para;
</a>
</h3>
<ul class="simple">
<li>
<p>
Consent is required for personal info collection
</p>
</li>
<li>
<p>
TD1 and TP-1015.3-V are used to calculate source deductions
</p>
</li>
<li>
<p>
Claim amounts may differ between federal and provincial forms
</p>
</li>
<li>
<p>
Employers must keep the forms on file (do not send to CRA/RQ)
</p>
</li>
</ul>
</section>
<section id="review-questions-sample">
<h3>
Review Questions (Sample)
<a class="headerlink" href="#review-questions-sample" title="Link to this heading">
&para;
</a>
</h3>
<ol class="arabic simple">
<li>
<p>
What does an offer letter signature signify?
</p>
</li>
<li>
<p>
What documents are included in a commencement package?
</p>
</li>
<li>
<p>
Name three common internal forms
</p>
</li>
<li>
<p>
What must payroll verify on a hiring form?
</p>
</li>
<li>
<p>
What must be checked for SINs starting with &ldquo;9&rdquo;?
</p>
</li>
<li>
<p>
True/False: Union dues can be deducted without consent.
</p>
</li>
<li>
<p>
What authorizes benefit premium deductions?
</p>
</li>
</ol>
</section>
<section id="example-evaluations">
<h3>
Example Evaluations
<a class="headerlink" href="#example-evaluations" title="Link to this heading">
&para;
</a>
</h3>
<p>
<strong>
Gloria Meyer (Alberta):
</strong>
- Claimed: Basic, eligible dependant, transferred tuition
- Appears accurate
</p>
<p>
<strong>
Luc Laframboise (Qu&eacute;bec):
</strong>
- Claimed: Basic, spouse, dependant in school, tuition transfer
- Appropriate provincial and federal claims made
</p>
<p>
<strong>
Ingrid Johansson (Alberta, Single Parent):
</strong>
- Claimed credits for two children
-
<strong>
Overclaimed
</strong>
dependant credit &ndash; only one is eligible
- Needs correction on federal and AB TD1 forms
</p>
<div class="admonition-onboarding-employee-exercise admonition">
<p class="admonition-title">
ONBOARDING EMPLOYEE EXERCISE
</p>
<p>
Using MS Forms, create a questionaire for gathering all required information for onboarding a new employee at Quebec-based company for the payroll purposes.
</p>
</div>
</section>
</section>
<span id="document-payroll_accounting">
</span>
<section id="payroll-accounting">
<h2>
Payroll Accounting
<a class="headerlink" href="#payroll-accounting" title="Link to this heading">
&para;
</a>
</h2>
<section id="journal-entries">
<h3>
Journal Entries
<a class="headerlink" href="#journal-entries" title="Link to this heading">
&para;
</a>
</h3>
<section id="accounting-recap">
<h4>
Accounting Recap
<a class="headerlink" href="#accounting-recap" title="Link to this heading">
&para;
</a>
</h4>
<p class="centered">
<strong>
<img alt="\Sigma \text{ Total Debits} = \Sigma \text{ Total Credits}" class="math" src="_images/math/3fa11f8e69bcb5e9be2df6754a5e4f614450b91c.png" style="vertical-align: 0px"/>
</strong>
</p>
<p class="centered">
<strong>
<img alt="\text{Assets} = \text{Liabilities} + \text{Equity}" class="math" src="_images/math/96afef116a3f4349b6cf21c73cca42773ed21927.png" style="vertical-align: -4px"/>
</strong>
</p>
<div class="math" id="equation-accountingequation">
<p>
<span class="eqno">
(1)
<a class="headerlink" href="#equation-accountingequation" title="Link to this equation">
&para;
</a>
</span>
<img alt="Assets = Liabilities + Equity" src="_images/math/f8b2faa121474b0dd0e28fef8ac413a56b6313b2.png"/>
</p>
</div>
<p>
Furthermore, we know that:
</p>
<p class="centered">
<strong>
<img alt="\text{Equity = Revenue - Expenses}" class="math" src="_images/math/020e49c3f9c40699b77e19e0a2b684d246ea21bb.png" style="vertical-align: -4px"/>
, which leads us to:
</strong>
</p>
<p class="centered">
<strong>
<img alt="\text{Assets = Liabilities + (Revenues - Expenses)}" class="math" src="_images/math/547c7611976b4041740caa3335735c193069bb84.png" style="vertical-align: -5px"/>
</strong>
</p>
<p>
Accounting equation
<a class="reference internal" href="#equation-accountingequation">
(1)
</a>
</p>
<p>
Payroll accounting is a critical component of the Canadian Payroll Administration system. It involves the systematic recording, analysis, and reporting of payroll transactions to ensure that all financial aspects of employee compensation are accurately reflected in the organization&rsquo;s financial statements.
Payroll accounting includes the management of employee wages, tax withholdings, benefit deductions, and other payroll-related expenses. The system is designed to automate these processes, ensuring accuracy and compliance with Canadian payroll regulations.
</p>
</section>
<section id="id1">
<h4>
Journal Entries
<a class="headerlink" href="#id1" title="Link to this heading">
&para;
</a>
</h4>
<p>
Journal entries are a key part of payroll accounting, as they document the financial impact of payroll transactions on the organization&rsquo;s accounts. Each payroll run generates a series of journal entries that reflect the distribution of wages, taxes, and deductions across various accounts.
These entries are essential for maintaining accurate financial records and ensuring that the organization&rsquo;s financial statements reflect the true cost of employee compensation. The Canadian Payroll Administration system automates the generation of these journal entries, reducing the risk of errors and ensuring compliance with accounting standards.
</p>
<blockquote>
<div>
<p>
DR Payroll Expenses $10,500.00
</p>
<p>
CR Payroll Payable ($10,500.00)
</p>
</div>
</blockquote>
<table class="docutils align-default" id="id2">
<caption>
<span class="caption-text">
Mar. 15, 2025
</span>
<a class="headerlink" href="#id2" title="Link to this table">
&para;
</a>
</caption>
<colgroup>
<col style="width: 41.7%"/>
<col style="width: 41.7%"/>
<col style="width: 16.7%"/>
</colgroup>
<thead>
<tr class="row-odd">
<th class="head">
<p>
DR Account
</p>
</th>
<th class="head">
<p>
CR Account
</p>
</th>
<th class="head">
<p>
Amount
</p>
</th>
</tr>
</thead>
<tbody>
<tr class="row-even">
<td>
<p>
Payroll Expenses
</p>
</td>
<td>
</td>
<td>
<p>
$10,500.00
</p>
</td>
</tr>
<tr class="row-odd">
<td>
</td>
<td>
<p>
Payroll Payable
</p>
</td>
<td>
<p>
$10,500.00
</p>
</td>
</tr>
<tr class="row-even">
<td>
<p>
<em>
To record accrual of payroll expenses for the period.
</em>
</p>
</td>
<td>
</td>
<td>
</td>
</tr>
</tbody>
</table>
</section>
</section>
</section>
<span id="document-review_questions">
</span>
<section id="review-questions">
<h2>
REVIEW QUESTIONS
<a class="headerlink" href="#review-questions" title="Link to this heading">
&para;
</a>
</h2>
<p>
This section contains review questions for the material covered in the course. These questions are designed to test your understanding and help reinforce the concepts learned.
</p>
<section id="new-employee-information">
<h3>
New Employee Information
<a class="headerlink" href="#new-employee-information" title="Link to this heading">
&para;
</a>
</h3>
<p>
Which one of the following is correct?
</p>
<blockquote>
<div>
<ol class="arabic simple">
<li>
<p>
Choice A
</p>
</li>
<li>
<p>
<strong>
Choice B
</strong>
</p>
</li>
<li>
<p>
Choice C
</p>
</li>
</ol>
</div>
</blockquote>
</section>
</section>
<span id="document-terminology">
</span>
<section id="terminology">
<h2>
TERMINOLOGY
<a class="headerlink" href="#terminology" title="Link to this heading">
&para;
</a>
</h2>
<section id="pensionable-earnings">
<h3>
Pensionable Earnings
<a class="headerlink" href="#pensionable-earnings" title="Link to this heading">
&para;
</a>
</h3>
</section>
<section id="insurable-earnings">
<h3>
Insurable Earnings
<a class="headerlink" href="#insurable-earnings" title="Link to this heading">
&para;
</a>
</h3>
</section>
</section>
<span id="document-rates_2025">
</span>
<section id="rates-for-2025">
<h2>
RATES FOR 2025
<a class="headerlink" href="#rates-for-2025" title="Link to this heading">
&para;
</a>
</h2>
<section id="canada-quebec-pension-plan-cpp-qpp">
<h3>
CANADA / QUEBEC PENSION PLAN (CPP / QPP)
<a class="headerlink" href="#canada-quebec-pension-plan-cpp-qpp" title="Link to this heading">
&para;
</a>
</h3>
<table class="docutils align-left" id="id1">
<caption>
<span class="caption-text">
CANADA / QUEBEC PENSION PLAN (CPP / QPP)
</span>
<a class="headerlink" href="#id1" title="Link to this table">
&para;
</a>
</caption>
<colgroup>
<col style="width: 68.4%"/>
<col style="width: 15.8%"/>
<col style="width: 15.8%"/>
</colgroup>
<thead>
<tr class="row-odd">
<th class="head">
<p>
Description
</p>
</th>
<th class="head">
<p>
CPP
</p>
</th>
<th class="head">
<p>
QPP
</p>
</th>
</tr>
</thead>
<tbody>
<tr class="row-even">
<td>
<p>
Yearly maximum pensionable earnings
</p>
</td>
<td>
<p>
$71,300
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
<tr class="row-odd">
<td>
<p>
Annual maximum contributory earnings
</p>
</td>
<td>
<p>
$67,800
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
<tr class="row-even">
<td>
<p>
Annual maximum contribution
</p>
</td>
<td>
<p>
$3,500
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
<tr class="row-odd">
<td>
<p>
Employee contribution rate
</p>
</td>
<td>
<p>
5.95%
</p>
</td>
<td>
</td>
</tr>
<tr class="row-even">
<td>
<p>
Employer contribution rate
</p>
</td>
<td>
<p>
5.95%
</p>
</td>
<td>
</td>
</tr>
<tr class="row-odd">
<td>
<p>
Basic exemption (Annual)
</p>
</td>
<td>
<p>
$3,500
</p>
</td>
<td>
</td>
</tr>
<tr class="row-even">
<td>
<blockquote>
<div>
<p>
Basic exemption (Monthly, 12)
</p>
</div>
</blockquote>
</td>
<td>
<p>
$291.67
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
<tr class="row-odd">
<td>
<blockquote>
<div>
<p>
Basic exemption (Weekly, 52)
</p>
</div>
</blockquote>
</td>
<td>
<p>
$67.31
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
<tr class="row-even">
<td>
<blockquote>
<div>
<p>
Basic exemption (Weekly, 53)
</p>
</div>
</blockquote>
</td>
<td>
<p>
$66.04
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
<tr class="row-odd">
<td>
<blockquote>
<div>
<p>
Basic exemption (Semi-monthly, 24)
</p>
</div>
</blockquote>
</td>
<td>
<p>
$145.83
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
<tr class="row-even">
<td>
<blockquote>
<div>
<p>
Basic exemption (Bi-weekly, 26)
</p>
</div>
</blockquote>
</td>
<td>
<p>
$134.61
</p>
</td>
<td>
<p>
$
</p>
</td>
</tr>
</tbody>
</table>
</section>
<section id="cpp2-contribution-rates-maximums">
<h3>
CPP2 CONTRIBUTION RATES MAXIMUMS
<a class="headerlink" href="#cpp2-contribution-rates-maximums" title="Link to this heading">
&para;
</a>
</h3>
<table class="docutils align-left" id="id2">
<caption>
<span class="caption-text">
CPP2 Contribution Rates Maximums
</span>
<a class="headerlink" href="#id2" title="Link to this table">
&para;
</a>
</caption>
<colgroup>
<col style="width: 81.2%"/>
<col style="width: 18.8%"/>
</colgroup>
<thead>
<tr class="row-odd">
<th class="head">
<p>
Description
</p>
</th>
<th class="head">
<p>
Ammount
</p>
</th>
</tr>
</thead>
<tbody>
<tr class="row-even">
<td>
<p>
Additional maximum annual pensionable earnings
</p>
</td>
<td>
<p>
$81,200
</p>
</td>
</tr>
<tr class="row-odd">
<td>
<p>
Employee and employer contribution rate
</p>
</td>
<td>
<p>
4%
</p>
</td>
</tr>
<tr class="row-even">
<td>
<p>
Maximum employee and employer contribution
</p>
</td>
<td>
<p>
$396
</p>
</td>
</tr>
<tr class="row-odd">
<td>
<p>
Maimum annual self-employed contribution
</p>
</td>
<td>
<p>
$792
</p>
</td>
</tr>
</tbody>
</table>
</section>
</section>
<span id="document-references">
</span>
<section id="references">
<h2>
REFERENCES
<a class="headerlink" href="#references" title="Link to this heading">
&para;
</a>
</h2>
<p>
<a class="reference external" href="https://www.canada.ca/en/revenue-agency/services/e-services/digital-services-businesses/payroll-deductions-online-calculator.html">
Payroll Deductions Online Calculator
</a>
</p>
<p>
<a class="reference external" href="https://laws-lois.justice.gc.ca/eng/acts/C-8/page-5.html#docCont">
CPP Maximum contributory earnings
</a>
</p>
<p>
<a class="reference external" href="https://laws-lois.justice.gc.ca/eng/acts/C-8/page-3.html#docCont">
Second additional CPP contributions
</a>
</p>
</section>
<span id="document-errata">
</span>
<section id="errors-and-errata">
<h2>
Errors and Errata
<a class="headerlink" href="#errors-and-errata" title="Link to this heading">
&para;
</a>
</h2>
</section>
</div>
<section id="glossary">
<h2>
Glossary
<a class="headerlink" href="#glossary" title="Link to this heading">
&para;
</a>
</h2>
<ul class="simple">
<li>
<p>
<a class="reference internal" href="genindex.html">
<span class="std std-ref">
Index
</span>
</a>
</p>
</li>
</ul>
<p>
<strong>
sys variables
</strong>
</p>
<div class="highlight-text notranslate">
<div class="highlight">
<pre><span></span>Python 3.12.3
</pre>
</div>
</div>
<div class="highlight-text notranslate">
<div class="highlight">
<pre><span></span>5
</pre>
</div>
</div>
</section>
</section>
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