The Heart of Oregon
Payroll Conference
Oct 2010
Canadian Payroll . . .not as “alien” as you may
think.
Presented by
Natasha Smyth BSc (Agr), CPM
The Heart of Oregon
Payroll Conference
Oct 2010
CANADA10 PROVINCES
3 TERRITORIES(over 185 tax jurisdictions)
The Heart of Oregon
Payroll Conference
Oct 2010
BRITISH COLUMBIA
ALBERTA
SASKATCHEWAN
MANITOBA
ONTARIO
QUÉBEC
NEW BRUNSWICK
NOVA SCOTIA
P.E.I.
NEWFOUNDLAND and LABRADOR
YUKON
N.W.T.
NUNAVUT
The Heart of Oregon
Payroll Conference
Oct 2010
Canadian Government Agencies
Canada Revenue Agency (CRA)
The Ministere du Revenu du Québec (MRQ)
Service Canada
Statistics Canada
Canada Labour Code
Provincial and territorial employment standards
Workers’ Compensation Boards
The Heart of Oregon
Payroll Conference
Oct 2010
Additional Taxing Considerations
Employer Education taxes - MB,NL,QC
Employer Health Taxes - MB,NL,ON,QC
Employer Training Tax – QC
Employer Taxes - NT/Nunavut
Employee Medical Premiums - BC
The Heart of Oregon
Payroll Conference
Oct 2010
Employment Standards
Minimum age
Minimum wage
Hours of work
Leave information
Overtime
Records retention
The Heart of Oregon
Payroll Conference
Oct 2010
Employment Standards Cont.
Statutory holidays
Vacation time and pay
Terminations
Statement of wages
Timing of payments
Pay advice format and content
The Heart of Oregon
Payroll Conference
Oct 2010
Setting Up An Employee
Required Information
Name and address
Social insurance number
Regular hours of work
Birth date
Date of hire/start date
Wage rate or salary
Federal TD1 Form
Provincial TD1 Form
Work location
Benefits information
The Heart of Oregon
Payroll Conference
Oct 2010
3 Types of Deductions
Statutory
Mandatory
Voluntary
The Heart of Oregon
Payroll Conference
Oct 2010
Statutory Deductions
Canada Pension Plan (CPP)
Employment Insurance (EI + Quebec Parental Insurance Plan in QC)
Federal and Provincial Income Taxes
The Heart of Oregon
Payroll Conference
Oct 2010
Mandatory Deductions
Legal (Garnishees, Family Support, Income Taxes)
Company compulsory – ie Benefit Plan Contributions
Union contract
The Heart of Oregon
Payroll Conference
Oct 2010
Voluntary Deductions
Canada Savings Bonds
Charitable Donations
Registered Retirement Savings Plans
Employee Loan Repayments
Voluntary Group Life
Employee Share Purchase Plans
Computer Purchase Plans
Calculating Canada Pension Plan Contributions
(CPP/QPP)
(EmployER portion the same at 4.95%)
FOR 2010
Year’s Maximum Pensionable Earnings $ 47,200.00
Year’s Basic Exemption (same for everyone) $ 3,500.00
Contributory Earnings $ 43,700.00
C/QPP Rate 4.95%
C/QPP Year’s Maximum EmployEE Contribution $ 2,163.15
C/QPP Year’s Maximum EmployER Contribution $ 2,163.15
The Heart of Oregon
Payroll Conference Oct 2010
C/QPP Basic Exemption
(annual exemption/ # pay periods)
Pay Period Type Exemption
Monthly $ 291.66
Semi-monthly $ 145.83
Biweekly (26) $ 134.61
Biweekly (27) $ 129.62
Weekly (52) $ 67.30
Weekly (53) $ 66.03
The Heart of Oregon
Payroll Conference Oct 2010
The Heart of Oregon
Payroll Conference
Oct 2010
CPP Contributions
(applies to everyone outside QC)
Contributions must be deducted if an employee:
Has pensionable earnings
Has reached age 18 and is under age 70.
Is not receiving disability benefits from the CPP/QPP plan
The Heart of Oregon
Payroll Conference
Oct 2010
QPP Contributions
(applies to everyone in QC)
Contributions must be deducted if an employee:
Has pensionable earnings
Has reached age 18 (no age cap)
Is not receiving disability benefits or pension from the CPP/QPP plan
The Heart of Oregon
Payroll Conference
Oct 2010
Calculating C/QPP Contributions
C/QPP contributions are pro-rated:
In the year an employee turns 18
In the year an employee turns 70 (CPP only)
In the year an employee dies
The Heart of Oregon
Payroll Conference
Oct 2010
Pro-Ration Example – C/QPP
Employee dies in February 2010
2010 contribution $2,163.15
Number of eligible months 2
2/12ths of $2,163.15 = $ 360.53
Employment Insurance(EI)
Quebec EI & QPIP
Note: Employees and Self-employed subject to QPIP
** unless a reduced premium rate applies
FOR 2010 FEDERAL EI QUEBEC EI QPIP
Year’s Max Insurable Earnings $ 43,200.00 $43,200.00 $62,500.00
Year’s Max EmployEEContributions
$ 747.36 587.52 316.25
EI/QPIP Rate 1.73% 1.36% 0.506%
Employer rate EI 1.4 x Employee Rate
2.422% 1.904% -
Employer rate – QPIP - - 0.708%
Year’s Max EmployERContributions
$ 1,046.30** $822.53 ** $442.50
The Heart of Oregon
Payroll Conference
Oct 2010
The Heart of Oregon
Payroll Conference
Oct 2010
Employment Insurance Premium Reduction
Employer premium rate of 1.4 x employee contribution can be reduced if there is a short term disability program in place that meets certain criteria – including sharing benefit reduction savings with employee.
Will require a second business number to report those employees on premium reduction plan.
Plan no longer needs to be approved annually by HRSDC
The Heart of Oregon
Payroll Conference
Oct 2010
Quebec Parental Insurance Plan (QPIP)
• provides temporary financial maternity, paternity, parental, and adoption benefits to eligible Québec residents who take time off work and have an interruption of earnings.
• For Québec residents only, QPIP coverage only applies to the above benefits rather that EI. EI continues to cover other benefits such as regular, sickness and compassionate care.
The Heart of Oregon
Payroll Conference
Oct 2010
Calculating Employment Insurance for Record of Employment Purposes
Québec has assumed weekly numbers can be obtained from ROE for QPIP program
Earnings that are not subject to EI and therefore not reported on the ROE are reported on a separate form
The Heart of Oregon
Payroll Conference
Oct 2010
Calculating Employment Insurance for Record of Employment Purposes
INSURABLE EARNINGS
Non Cash taxable benefits are not Insurable
Retirement Allowances are not Insurable
Self employment – and related parties are not insurable
The Heart of Oregon
Payroll Conference
Oct 2010
Calculating Employment Insurance for Record of Employment Purposes
INSURABLE HOURS
Hours worked and paid
Deemed hours
Paid leave hours
The Heart of Oregon
Payroll Conference
Oct 2010
Income Tax Calculations
Table method
Manual method
Formula method
Tables on Diskette (TOD) –except QC
Payroll Deductions Online Calculator (PDOC) -except QC
WinRAS – QC only
The Heart of Oregon
Payroll Conference
Oct 2010
Special Taxing Considerations
Bonus method
Bonus pay
Pay in lieu of notice
Vacation pay (no time taken)
Retroactive pay method
A variation of the bonus method
Lump sum Tax rates
Retiring allowance
Severance
Commission Method
Depends on commissions paid with or without expenses incurred
The Heart of Oregon
Payroll Conference
Oct 2010
Net Taxable Income is:
Gross Taxable Income
(gross taxable
earnings + total taxable benefits)
-minus
Registered pension plan contributions
Family Support payments
Employee RRSP contributions
Exemptions allowed by CRA, MRQ (Fed and Prov)
Union dues - except Quebec
The Heart of Oregon
Payroll Conference
Oct 2010
Provincial BC -- effective Jan 2010
Sample Income Tax RatesFederal – effective Jan 2010
FROM TO RATE
$ 0 $ 35,859.00 5.06%
$ 35,859.01 $ 71,719.00 7.7%
$ 71,719.01 $ 82,342.00 10.5%
$ 82,342.01 $ 99,987.00 12.29%
$ 99,987.01 and over 14.7%
FROM TO RATE
$ 0 $ 40,970.00 15%
$ 40,970.01 $ 81,941.00 22%
$ 81,941.01 $ 127,021.00 26%
$ 127,021.01 and over 29%
The Heart of Oregon
Payroll Conference
Oct 2010
Net Pay Determination
Gross Earnings
minus
Statutory deductions
minus
Non-statutory deductions
equals
NET PAY
Sample Payroll CalculationFor one employee bi weekly in Ontario working
40 hrs/week at $12.50/hr
Gross pay (80 hours) $1000.00
CPP @4.95% (42.84)*
EI @1.73% (17.30)
Federal taxes (75.02)
Provincial taxes (41.63)
Net pay $823.21
*CPP calc.= ($1000.00-134.61 ) x 4.95%
The Heart of Oregon
Payroll Conference
Oct 2010
Sample Payroll CalculationFor one employee weekly in Ontario working
40 hrs/week at $25/hr
Employer portion CPP $42.84
Employer portion of EI $24.22
Total remittance to the CRA is $176.79
(fed&prov tax, EE & ER EI, EE & ER CPP)
Other employer costs:Vacation accrual ie 4% =40.00
WCB ie. assume rate of 2% = $20.00
The Heart of Oregon
Payroll Conference
Oct 2010
The Heart of Oregon
Payroll Conference
Oct 2010
CRA & MRQ Remittance RequirementsWeekly:
1st to 7th - due three business days after the 7th
8th to 14th - due three business days after the 14th
15th to 22nd - due three business days after the 22nd
22nd to end - due three business days after the last day of the month
Semi-monthly:
1st to 15th - due on 25th of month
16th to last day - due on 10th of month following
Monthly - due on 15th of month following
Quarterly - due on 15th of month following the end of the Quarter
Québec CAUTION – if due date falls on a non-working day, due date is advanced
The Heart of Oregon
Payroll Conference
Oct 2010
Employees vs. Self-Employed Status
Criteria used to define status:
Subordination in the performance of work
Financial or economic criteria
Ownership of tools
Integration of tasks carried out by worker
Specific result of the work
Attitude of the parties wrt the relationship
The Heart of Oregon
Payroll Conference
Oct 2010
Employees vs. Self-Employed Status
MRQ Publications:
IN-301-V-Employee or Self-Employed Person
CRA Publications:
RC4110 - Employee or Self Employed?
CPT1 - Application for ruling
The Heart of Oregon
Payroll Conference
Oct 2010
Year End Processes
Process any adjustments -Taxable benefits, pension adjustments, manual cheques
Update employee records-address, tax exemptions (if any changes)
Update benefit rates Update WCB rate If you have a reduced EI rate – watch for notice
from HRSDCWatch for CRA/MRQ remittance frequency
change (late Nov./early Dec.)
The Heart of Oregon
Payroll Conference
Oct 2010
Year End Processes cont.
Reconcile your tax (CRA/MRQ) account Reconcile your WCB account File WCB annual return – due date varies File provincial tax authority filings File the following by Feb 28th: RL 1 slip for employees RLZ-1.S-V Summary for MRQ T4 slip for employees T4 Summary for CRA
The Heart of Oregon
Payroll Conference
Oct 2010
Privacy Legislation
the Privacy Act- This Act imposes obligations on some 150 federal government departments and agencies to respect privacy rights by limiting the collection, use and disclosure of personal information
the Personal Information Protection and Electronic Documents Act (PIPEDA)-sets out ground rules for how private sector organizations may collect, use or disclose personal information in the course of commercial activities.
The Heart of Oregon
Payroll Conference
Oct 2010
Some Taxable Benefits Gifts and awards - effective January 2010, the
$500 will be an exemption rather than a threshold. Any amounts exceeding $500 are to be reported as a taxable benefit.
Car allowance – any amounts paid to an employee is taxable benefit unless it is based on a reasonable per km allowance.
Automobile Benefits Online Calculator -For employees’ who have personal use of an automobile owned or leased by the business, the CRA provides an online tool to calculate the automobile benefit amount that should be prorated to the employee's pay periods.
(CRA Guide T4130)
The Heart of Oregon
Payroll Conference
Oct 2010
Some Useful Web Sites
Canada Revenue Agency – www.cra.gc.ca(Business registration, Rates, GST/HST)
Québec– www.revenu.gouv.qc.ca/eng/ministere/index.asp
HRSDC (EI) – www.hrsdc.gc.ca
Service Canada – www.servicecanada.gc.ca
Privacy Commissioner – www.privcom.gc.ca
WCB – www.awcbc.org/en/linkstoworkerscompensationboardscommissions.asp
(links to all Provinces)
Canadian Payroll Association (CPA) – www.payroll.ca
Some Terminology
Payroll Account Number – the employer’s “account number” with the CRA. Used to remit statutory deductions, tax forms and ROEUS equivalent =Federal Employer Identification Number
T4 – Reports to the CRA and the employee all relevant income and deduction information for the taxation year. US equivalent = W2 Wage and Tax Statement
RL-1 – Reports to the MRQ and the employee all relevant income and deduction information for the taxation year.
T4A – Reports to the CRA for other Taxable Income – (including Independent Contractors)
TD1 and TP-1015.3-V – federal and provincial forms for employees to claim credit amounts and reduce tax at sourceUS equivalent = W4
P.I.E.R report – year end variances
The Heart of Oregon
Payroll Conference
Oct 2010
Some Terminology cont.
PD7A / PD7A-RB – remittance forms for CRA submitted with payroll remittances. PD7A is used by regular remitters, PD&A-RB is used by accelerated remitters. US equivalent = Form 8109 – Federal Tax Deposit Coupon
ROE – Record of employment: an HRSDC form completed by the employer when an employee has an interruption of earnings. Used by employee to claim employment insurance or Quebec Parental Insurance Plan benefits. US equivalent = none
RRSP – Registered retirement savings plan: a plan that an employee contributes to, to save money for retirement. Contributions and interest earned are tax exempt until withdrawn. Some employers provide a match. Contributions are subject to an annual maximum.US equivalent = 401(k) plan
PCP – Payroll Compliance Practitioner
CPM – Certified Payroll Manager
The Heart of Oregon
Payroll Conference
Oct 2010
The Heart of Oregon
Payroll Conference
Oct 2010
Canadian Payroll
Presented by Natasha Smyth, CPM
Vice PresidentOnPayroll.ca Corp
1-800-955-0806 [email protected]
North Vancouver, BCCANADA
The Heart of Oregon
Payroll Conference
Oct 2010
Canadian Payroll
BONUS MATERIAL
The Heart of Oregon
Payroll Conference
Oct 2010
Quebec Payrolls – some differences
Pay Equity Act– employers with employees in Québec may be required to through the exercise to prove pay equity.
QPP when an employee turns 70 or starts to receive QPP,
QPP contributions will continue to be made. allows for employees to continue making
contributions on what they would have earned rather than what they normally earn through progressive retirement plans.
The Heart of Oregon
Payroll Conference
Oct 2010
Quebec Payrolls – some differences cont.
Relocation Allowance CRA allows a tax free non-accountable allowance up to
$650. MRQ allows a tax free non-accountable allowance up to 2
weeks salary.
Bonuses and Retroactive payments. CRA says that where an employee receives no more than
$5,000 for the entire year, an employer may calculate tax at the rate of 15% on the amount outside of Québec and 10% inside of Québec.
MRQ says that if the amount does not exceed $11,950, then the Provincial rate would be 8%.
The Heart of Oregon
Payroll Conference
Oct 2010
Quebec Payrolls – some differences cont.
Lump Sum Payments – withholding rates
5% on amounts up to $5,000 (vs. 10%)
10% on amounts from $5,000 to $15,000 (vs. 20%)
15% on amounts over $15,000 (vs.30% )
The Heart of Oregon
Payroll Conference
Oct 2010
Wages in lieu of notice are subject to YES NO
CPP (CRA) X
QPP (MRQ) X
EI (CRA) X
QPIP (MRQ) X
FEDERAL TAX (BONUS METHOD) (CRA) X
PROVINCIAL TAX (LUMP SUM TAX RATE) (MRQ) X
QHSF X
CNT X
WSDRF X
VACATION PAY CALCULATION X
Wages in lieu of notice are reported on a
Record of Employment
X
T4 Box 14
RL-1 Box 0/code RJ
Quebec Payrolls – some differences cont.
The Heart of Oregon
Payroll Conference
Oct 2010
QPIP – Some Rules
Applies to salaried worker living in Québec when benefit period begins
Applies to self employed – must be living in Québec when benefit period begins AND living there on December 31st of previous year.
Wages or regular time worked or spent on business activities (self-employed) must have been reduced by at least 40%
Insurable earnings must be at least $2,000 regardless of the number of hours worked.
The Heart of Oregon
Payroll Conference
Oct 2010
QPIP – Some Rules Cont.
EI requires a minimum number of hours worked, QPIP doesn’t
Both Ministѐre de l’Emploi et de la Solidarité Sociale (MESS) and Revenu Québec are responsible for administration
Generally the status of a worker for QPIP purposes the same as those for QPP (Québec Pension Plan) purposes.
QPIP paid on insurable employment, broadly defined as all employment in Québec including those employees not required to report to work at the employer’s place of business, but whose salary or wages are paid from the employer’s business located in Québec.
The Heart of Oregon
Payroll Conference
Oct 2010
QPIP – Some Rules Cont. Employees are exempt from paying premiums where their
earnings are less than $2,000 but employers MUST deduct from first dollar earned.
Employers have to start from zero even if new employee maxed out at a previous employer that year.
Shareholders regardless of percentage of ownership.
Directors fees subject to QPIP regardless of residency and whether or not in receipt of a salary.
The Heart of Oregon
Payroll Conference
Oct 2010
Some additional provincial taxes that apply to payrolls in Quebec
Quebec Health Services Fund (QHSF) Employer contribution rate is from 2.7% to 4.26%
based on the employer’s TOTAL WORLDWIDE PAYROLL. Flat 4.26% with total annual worldwide
payroll exceeds $5,000,000.
The Heart of Oregon
Payroll Conference
Oct 2010
Quebec Labour Standards Contribution (CNT Levy) 80 cents per $1,000 on total wages
paid for all employees subject to a maximum of $62,000 per
employee. Remitted by last day of February in following year.
The Heart of Oregon
Payroll Conference
Oct 2010
Workforce Skills Development and Recognition Fund
(WSDRF) Employers whose total Québec
Payroll exceeds $1,000,000 are subject to a special training tax -
1% of their total Québec payroll for the year. Contribution amount is
reduced by eligible training expenses as defined by regulation. Remitted by last day of February in
following year.