PAYROLL INFOLINE: YOUR PAYROLL QUESTIONS ANSWERED

Payroll InfoLine provides members with accurate answers to their most complex payroll questions. This toll-free telephone and email hotline is staffed by payroll experts with more than 200 years of combined payroll experience. InfoLine continues to be our most popular member service.

Toll free: 1-800-387-4693 ext. 772
Tel.: 416-487-3380 ext. 772
Email:
InfoLine@payroll.ca

Please be ready to provide your CPA number when you contact us to take advantage of this valuable member service.

Before you call, browse our web resources or read our top 10 payroll InfoLine Q&As.

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Top Payroll InfoLine Inquiries: We have Payroll Guidelines and Professional Development Seminars on virtually all of these topics!

  • Labour/Employment Standards
  • Statutory Deductions
  • Year-end Reporting/Filling
  • Taxable/Non-Taxable Benefits
  • Terminations
  • ESDC/Service Canada
  • Earnings
  • Legal Deductions
  • Payroll Practices
  • WCB/CSST

Top 10 Payroll InfoLine Questions: The answer to the most popular Payroll InfoLine question is open to everyone. Members can log in to see more answers.

  1. How can we best explain the bonus tax method to employees and address their concern of a higher income tax deduction than on a regular payment?
  2. When processing a bonus payment to an employee on a leave of absence such as maternity leave, when do we prepare an amended ROE and when must the employee declare those earnings?
  3. Under the CRA’s rules for gifts and awards, may we give an employee a gift card worth up to $500 without reporting it as a taxable benefit?
  4. What are the tax implications of employer health or dental reimbursements not covered under a group plan?'
  5. What is a retiring allowance and what statutory withholdings is the payment subject to?
  6. How do we determine an eligible and non-eligible retiring allowance? What are the implications for Year-end reporting?
  7. Are part-time employees entitled to statutory holidays? If so, how do we calculate the rate of pay?
  8. Must we restart CPP deductions for all employees who had already stopped CPP contributions after starting to receive their CPP pensions?
  9. Are all our employees entitled to vacation pay?
  10. When I transfer employees from Quebec to Ontario (under the same business entity and for the same employer), do I need to take into consideration the year-to-date (YTD) pensionable earnings or the year-to-date employee Quebec Pension Plan (QPP) contributions in order to calculate the Canada Pension Plan (CPP) contributions?

 

  1. How can we best explain the bonus tax method to employees and address their concerns of a higher income tax deduction than on a regular payment?

    Although a bonus payment may fall within one of the employee’s pay periods, the regular income tax tables should not be used to determine the amount of income tax owing on the bonus, as this will increase the amount of tax being deducted even more. The pay period tables apply a rate of taxation based on the assumption the employee will be making X amount of dollars for the year, spread over Y number of pay periods. A bonus payment increases the employee’s overall earnings for the year, which increases the rate at which the employee should have been paying income tax since the beginning of the taxation year.

    For example, an employee receiving an annual salary of $50,000 per year in addition to a bonus payment of $10,000 will be taxed based on $60,000 per year when they file their personal income tax return at the end of the year. The employee’s income tax deductions each pay period, however, are only calculated based on an annual salary of $50,000. With a bonus payment, the payroll system is required to recalculate the employee’s taxes based on $60,000 and then calculate the difference between the income taxes the employee pays on a regular basis and the employee’s newly revised salary which has been increase by $10,000 for the entire year.

    The payment of the bonus often results in the employee being bumped up to a higher income bracket. Both the Canada Revenue Agency (CRA) and Revenu Québec (RQ) require the employer to collect the difference between the pro-rated income tax that the employee regularly pays on an annual pay of $50,000 and the income taxes that would have been paid based on an annual salary of $60,000. This difference is then deducted from the bonus payment.

    If an employer pays an employee additional bonuses throughout the year, the income taxes will be recalculated once again to take into consideration the previous bonuses paid to the employee.
    The bonus tax method can be used for any payments that do not represent regular pay period earnings, for example, stock option taxable benefits, a taxable gift or award, or outstanding vacation paid upon termination.

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  2. When processing a bonus payment to an employee on a leave of absence such as maternity leave, when do we prepare an amended ROE and when must the employee declare those earnings?

    Click here for the answer.

    Top

  3. Under the CRA’s rules for gifts and awards, may we give an employee a gift card worth up to $500 without reporting it as a taxable benefit?

    Click here for the answer.

    Top

  4. What are the tax implications of employer health or dental reimbursements not covered under a group plan?

    Click here for the answer.

    Top

  5. What is a retiring allowance and what statutory withholdings is the payment subject to?

    Click here for the answer.

    Top

  6. How do we determine an eligible and non-eligible retiring allowance? What are the implications for Year-end reporting?

    Click here for the answer.

    Top

  7. Are part-time employees entitled to statutory holidays? If so, how do we calculate the rate of pay?

    Click here for the answer.

    Top

  8. Must we restart CPP deductions for all employees who had already stopped CPP contributions after starting to receive their CPP pensions?

    Click here for the answer.

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  9. Are all employees entitled to vacation pay?

    Click here for the answer.

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  10. When I transfer employees from Quebec to Ontario (under the same business entity and for the same employer), do I need to take into consideration the year-to-date (YTD) pensionable earnings or the year-to-date employee Quebec Pension Plan (QPP) contributions in order to calculate the Canada Pension Plan (CPP) contributions?

    Click here for the answer.

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