Deck 3: Determining Taxable Allowances for Employees

Question 1

The pay cycle is determined by the Canada Revenue Agency and cannot be altered by the employer.

Answer 1

False

Question 2

The employment contract may express payment in any method imagined (for example: per hour, per year, per unit, per dollar sold, per telephone call, per page written, etc.).

Answer 2

True

Question 3

Employees who earn a salary can be asked to work more than 44 hours in a week without being entitled to overtime pay.

Answer 3

False

Question 4

To qualify as a taxable benefit the employee must receive something that is of a personal benefit to them.

Question 5

Mary has a job as waitress at a small restaurant. Tips are pooled in a jar and distributed back to employees at the end of each shift by the manager. These tips are not considered taxable income because they are funded by the patrons rather than the owner of the business.

Question 6

Rachel works at Taco Bell and receives a free meal at the end of each shift. This meal must be included in her pay calculation as a taxable benefit.

Question 7

Amblake Co. offers a $500 prize to employees who have completed a voluntary survey to help them gather information about employee engagement. This bonus does not have to be taxed.

Question 8

If an employee earns a salary of $58,500 per year, their weekly pay cycle salary would be:

A) $2,250.00
B) $4,875.00
C) $1,125.00
D) $562.50
E) $2,437.50

Question 9

If an employee earns a salary of $58,500 per year, their semi-monthly pay cycle salary would be:

A) $2,437.50
B) $562.50
C) $4,875.00
D) $1,125.00
E) $2,250.00

Question 10

If Mary earns $260,000 per year how much does she earn per week?

A) $260,000
B) $2,500
C) $6,000
D) $10,000
E) $5,000

Question 11

If Sue earns $55 per hour and works 15 hours, what is her gross pay for the period?

A) $55
B) $1,235.70
C) $825
D) $15
E) $750

Question 12

An example of a taxable benefit would be:

A) Use of a company car while working.
B) A paid gym membership.
C) Tuition paid for a WordPress course required for work.
D) An ergonomic chair provided for the employee to use at the office.
E) Airline tickets to travel to an office event.

Question 13

Reimbursement of costs covered by employees on behalf of the employer such as travel expenses and meal allowances:

A) Are reported as part of gross wages.
B) Increase the employee's taxable income.
C) Must be below $300 per person per calendar year.
D) Must be reported on a T4 to the Canada Revenue Agency.
E) Are paid through Accounts Payable and do not impact deductions.

Question 14

The following is not an example of a taxable allowance: (select as many as apply)

A) Cash paid to cover travel expenses such as hotels, airfare, taxis, meals, etc.
B) Cash paid to an employee to purchase clothing to wear on the job.
C) Cash paid to cover the cost of a car when asked to use own vehicle for company business.
D) Cash paid to cover entertainment costs for the benefit of the company.
E) Cash paid to cover living expenses when required to work away from normal residence.

Question 15

Cell phone service paid for by the employer for the employee's personal use is:

A) Not taxable
B) Taxable with CPP and EI deductions
C) Taxable with CPP deductions but not EI
D) Taxable with EI deductions but not CPP
E) Not taxable but subject to CPP deductions

Question 16

Use of a company gym on site (recreational facility) is:

A) Not taxable
B) Taxable with CPP and EI deductions
C) Taxable with CPP deductions but not EI
D) Taxable with EI deductions but not CPP
E) Not taxable but subject to CPP deductions

Question 17

Payments for guests travelling with an employee, in cash are:

A) Not taxable
B) Taxable with CPP and EI deductions
C) Taxable with CPP deductions but not EI
D) Taxable with EI deductions but not CPP
E) Not taxable but subject to CPP deductions

Question 18

Cash reimbursement for money spent to pay for office supplies such as postage stamps are:

A) Not taxable
B) Taxable with CPP and EI deductions
C) Taxable with CPP deductions but not EI
D) Taxable with EI deductions but not CPP
E) Not taxable but subject to CPP deductions

Question 19

This information is not required in order to calculate the automobile taxable benefit for employees who are permitted to use company owned cars for personal use.

A) The cost of gas for personal driving.
B) The amount of money reimbursed to the employer by the employee for personal use.
C) The total amount of business kilometres driven.
D) The total number of kilometres driven.
E) The purchase price of the automobile.

Question 20

The CEO of Amblake Co. would like to offer free parking to all employees in a prime downtown space. What impact will this have on their pay?

A) Will increase their rate of pay per hour.
B) No impact.
C) Will result in higher statutory deductions.
D) Will result in lower statutory deductions.
E) Will reduce their net income by the full value of the parking space.

Question 21

Fred Vedaro is paid bi-weekly and earns $15 per hour with overtime paid after 44 hours in one week. Fred works 48 hours in the first week and 39 in the second. Vacation pay at 4% will be paid on each pay cycle. Calculate Fred's gross wages for this two week period.

Question 22

Martha Jovia is paid weekly and earns $25 per hour with overtime paid after 44 hours in one week or 8 hours in one day. Martha worked 4 hours on Sunday, 8 hours on Monday, 10 on Tuesday, 7 on Wednesday and nothing for the remainder of the week. Vacation pay at 6% will be paid on each pay cycle. She also earns a shift premium of 5% for each hour worked on a weekend. Calculate Martha's gross wages for this one week period.

Question 23

List 3 examples of taxable benefit.

Question 24

What information is required to utilize the Canada Revenue Agency online calculator of the automobile taxable benefit?

Question 25

Frank Hill works for a company with a semi-monthly pay cycle. He earns
$80,000 per year and receives over-time paid at time and a half for any approved hours worked in excess of 40 hours per week. He receives a parking allowance of $100 per month and is paid $25 per hour for working on-call on weekends.
During this pay cycle Frank worked 9 hours of approved over-time this pay cycle and was on-call for 10 hours on Saturday. Calculate Frank's gross earnings for this pay cycle.

Question 26

Sophie Gowna works for a company with a bi-weekly pay cycle. She earns $30 per hour and receives over-time paid at time and a half for any hours worked over 37.5 in one week. Sophie receives a cash company car allowance of $300 per month and is paid 8% vacation pay on hours worked. She also is receiving a
$973.45 cash reimbursement of travel expenses incurred for the company last month. During this pay cycle Sophie worked 40 hours in the first week and 35 hours in the second. Calculate Sophie's gross earnings for this pay cycle.