National Payroll Institute PF1 Dumps

Legislated wages in lieu of notice are treated as pensionable employment earnings for CPP purposes, so they are included with the employee’s final regular pay when calculating CPP deductions (assuming no CPP exemption applies).

Step 1: Determine total pensionable earnings for the week:

$7,760.00 + $875.00 = $8,635.00.

Step 2: Subtract the CPP basic exemption (Year’s Basic Exemption is $3,500 annually). For a weekly payroll, the basic exemption is prorated:

$3,500 ÷ 52 = $67.31.

CPP contributory earnings for the week:

$8,635.00 − $67.31 = $8,567.69.

Step 3: Apply the 2026 CPP employee contribution rate of 5.95% (base CPP). The question states the annual maximum will not be exceeded, so no capping is required in this calculation.

CPP contribution:

$8,567.69 × 5.95% = $509.7777…, rounded to $509.78.

For payroll deductions, the key concept is the employee’s province of employment (POE)—not where they live. The CRA states that the POE is determined primarily by the employer’s establishment where the employee “reports for work.” If an employee reports for work at an employer’s establishment located in Quebec, then the POE is Quebec, even if the employee’s province of residence is Ontario.

This matters because Quebec has distinct payroll requirements. The CRA notes that when the POE is Quebec, employers must apply Quebec-based payroll rules, including deducting Québec Pension Plan (QPP) contributions instead of CPP, and deducting Québec parental insurance plan (QPIP) premiums, along with Quebec provincial income tax withholding.

In practice, payroll must set up the employee using Quebec as the POE and ensure stakeholders (HR, finance, the employee) understand why deductions may differ from Ontario residents working in Ontario. Any over/under-withholding due to POE vs. residence is typically reconciled when the employee files their personal tax return.

Anne has both an automobile standby charge (because the car was made available) and an operating expense benefit (because the employer paid operating costs and she did not reimburse).

1) Standby charge (leased auto): Lease cost for standby charge purposes includes GST and excludes insurance.

Monthly lease incl. GST = $198.60 × 1.05 = $208.53.

Standby charge per month = 2/3 × $208.53 = $139.02.

Days available ÷ 30 = 365 ÷ 30 = 12.17, rounded to 12.

Annual standby charge = $139.02 × 12 = $1,668.24.

2) Operating expense benefit: Personal km = 34,134 − 15,805 = 18,329.

Optional method requires the automobile be used primarily (>50%) for business; Anne’s business use is under 50%, so the optional method does not apply and the fixed rate must be used.

Fixed rate (2026) = $0.34/km → 18,329 × 0.34 = $6,231.86.

Total taxable benefit = $1,668.24 + $6,231.86 = $7,900.10.