PCP Class 1 Jan 9th

 DO ALL THE PRACTICE QUESTIONS (May need to do 3 times since questions change)
 KNOW ALL THE LEARNING OBJECTIVES
 DO THE DISCUSSION THREAD

PPT SLIDES

 Learning Objectives:
o Uses of the term payroll
o Payrolls objectives
o Who are payrolls stakeholders?
o Differences between federal and provincial and territorial jurisdictions
o How each stakeholder affects payroll processes and procedures (DON’T KNOW)
o The Canadian Revenue Agency’s factors for determining whether an individual is
an employee or self-employed.

Payrolls objectives

 Objective of the payroll function (4 Objectives):

o Pay employees accurately and on time, in compliance with legislative
requirements for a full annual payroll cycle.
 Pay employees accurately.
 On time
 In compliance with legislative requirements
 For a full annual payroll cycle

Uses of the term payroll

 Payroll is the process of paying employees in exchange for the services they perform.
o Contractors SHOULD NOT be paid by payroll.
o Payroll only pays employees of their company.
o Gig economies like Uber and TaskRabbit have issues with this.
 Are you an employee or independent contractor?
 Makes it difficult to see who an employee is. That is why a lot of court
cases are happening.
 Payroll is the department that administers payroll.
 Payroll is the total number of people employed by an organization.

 Payroll is the wages and salaries paid out in a year.

 Payroll is a list of persons to be paid and the amount due to each.

 Compliance is the observance of official requirements.

o For payroll practitioner, this means performing payroll functions according to:
 Federal and provincial/territorial legislative
 Non-governmental stakeholder requirements
 Examples: Benefactors, unions, employees, owners, garnishments,
donations, insurance companies.

 Legislative requirements are termed statutory.

o Legislative means having the power to create laws.

 A payroll practitioner’s responsibilities will differ depending on:

o Size of organization
o Number of jurisdictions in which they pay.
o The reporting structure under which they work.
o Whether there are other related departments in the organization.

 Payroll is either part of Accounting or HR

o Often switches between these 2 over the years.

 Small and medium sized organizations may have payroll practitioners whose jobs include
other functions, including:
o HR
o Accounting
o Information Technology (IT)
o Administration
BEFORE NOW
Small Org. = Under 50 employees Small Org. = Under 100 employees
Medium Org. = Under 200 employees Medium Org. = Under 500 employees
 Larger organizations may have a distinct payroll department with specific payroll
positions, in addition to separate human resources, accounting and administrative
groups.

 Payroll practitioners should know they following to effectively perform their duties:

o Payroll Compliance Legislation

o Payroll Processes
o Payroll Reporting

 Their knowledge should also include:

o Technical skills (using ADP, applying technicalities to situations)
o Personal and professional skills (Communication)
o Behavioral and ethical standards (doing the right thing)

 A parking spot given at work is a TAXABLE BENEFIT.

 NPI code of professional conduct:

o Minimum standards of professional behavior

o Addresses issues around personal accountability and integrity
o Reflects the Association’s values of community, professionalism, and
authoritative knowledge.
o Holds certification holders, members, and students to a high ethical standard.

Who are payrolls stakeholders?

 Payroll 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.

 Government stakeholders can be divided into:

 o Federal
o Provincial and territorial

 Government legislation provides the rules and regulations that the payroll function must
administer with respect to payments made to employees.

Differences between federal and provincial and territorial jurisdictions

 Federal jurisdiction applies to:

o Industries and undertakings of inter-provincial/territorial nature

o Organizations whose operations have been declared for the general advantage of
Canada or two or more provinces.
o Armies and navies are federally regulated.
o The banking system is federally regulated.
o Credit unions ARE NOT federally regulated.
o Radio/TV, satellites, internet are federally regulated.
o Go train and TTC are Ontario regulated.
o Greyhound is federal.
o Mining is NOT federally regulated.
 Uranium is federally regulated even though mining is not. This is to
protect the borders and national security.
o Mining oil in Alberta follows Alberta rules.

 Employers must follow the employment/labor standards legislated by the jurisdiction in

which their employees work, unless they are governed by the federal labor standards.

 8%-12% of payroll follows federal rules whereas about 88% of payroll follows provincial
rules.

 You DO NOT get to choose whether to follow provincial rules or federal rules. They are
SET.
 Who are payrolls stakeholders?

 Internal stakeholders:

o Employees
o Employer
o Other departments

 External stakeholders:
o Benefit carriers
o Charities
o 3rd party administrators
o Courts and the CRA
o Pension providers
o Outsource/software vendors.
o Unions

 Employer – Employee Relationship

o Contract OF Service: 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.
 They added “full-time” “part-time” in definition to include everyone.
o Contract FOR Service: a business relationship whereby one party agrees to
perform certain specified work stipulated in the contract for another party.

The Canadian Revenue Agency’s factors for determining whether an individual is an employee
or self-employed

 Factors used to determine whether an individual is an employee or self-employed:

o CRA uses a two-step approach (Does not apply to Quebec)
 Step 1: establish what the intent was when the worker and the payer
entered into the working arrangement.
 Step2: ask a series of questions that relate to the following factors:
 Level of control the payer has over the worker.
  Whether or not the worker provides the tools and equipment
 Whether the worker can subcontract the work or hire assistants
 The degree of financial risk taken by the worker
 The degree of responsibility for investment and management is
held by the worker.

 “Worker” word is used when unsure if an employee or self-employed (contractor)

 If the employer provides tools, then the worker is an employee.
 Employees must do the work themselves and cannot hire anyone else but if they are a
contractor, they can hire someone else.
 The more independent decisions a worker makes, they are more likely to be a contractor
rather than an employee.
 If you are unsure if someone is an employee or contractor (self-employed) even after
going through the two step process set by the CRA , then you must call the CRA to
confirm.
o This is called requesting a ruling from them.

QUIZ

 A request for a ruling as to the status of a worker under the Canada Pension Plan Act or
the Employment Insurance Act might be required in which of the following situations?
(MCQ)
o To determine if a worker's employment is insurable
o To determine if a worker's employment is pensionable
o To determine if an individual is an employee or a contractor
o In all of the above situations
 Canada Pension Plan rates generally change on the first of January of each year. This is
an example of
o Regulation
 Canada labor code consists of:
o Employment standards
o Industrial relations
o Occupational health and safety
 Regulations determine: how the rules are to be applied
 Legislations determine: what the rules are
 All provinces and territories have authority over laws regarding:
o Civil rights
o Property rights
 o Employment standards
 Employee works for a bookstore in BC, what jurisdiction would employee fall under for
employment standards: (MCQ)
o Federal
o Canada labor code
o British Columbia
o Both b and c
 Rates of CPP calculation are changed by federal government through regulations.

 What is the possible result of payroll noncompliance:

o Jail sentence
o Fines, penalties, and interest charges
o Visit from government officer.
o All the above

 Federal and provincial/territorial tax systems are based on the principle of:
o Federal assessment
o Provincial assessment
o Self assessment
o All the above

 A payroll practitioner must ensure the organization is compliant with:

o All stakeholder requirements
o Government legislation
o Union collective agreements
o Group insurance policies

 A contract for service requires that an employer:

o Has a degree of financial risk for the work.
o Does not control how the work is done.
o Withholds federal and provincial taxes.
o Withholds CPP contributions.

 Which jurisdiction would the dockworkers of a shipping company in Newfoundland and

Labrador fall under the employment standards?
o Employers’ choice
o Federal
o Newfoundland and Labrador
o None of the above