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Chapter 3

Payroll Fundamentals 1

TermDefinition
Expense reimbursements amounts paid to cover expenses incurred while working. Not included in income or deductions.
Expense reimbursements (Personal living expenses) taxable allowance, included in income and subject to all deductions. (e.g. paid for travel from home to office).
Allowances additional dollar amounts paid for the use of personal property for business purposes.
Taxable allowances included in income and subject to all deductions.
Car allowance (reasonable) not included in income or deductions if: 1. Flat amount is based solely on business km. 2. Fixed amount is based on gov't-prescribed rates. 3. No reimbursements.
Gov't -prescribed rates $0.59/km, 1st 5,000 km & $0.53/km, thereafter
Gov't-prescribed rates (YT, NWT, NU) $0.63/km, 1st 5,000 km & $0.57/km, thereafter
Car allowance (unreasonable) included in income and subject to all deductions if: 1. Flat amount is not based on solely on business km. 2. Fixed amount is lower or higher than gov't-prescribed rates. 3. Credit card or reimbursements for expenses (e.g. gas).
Meal allowance (CRA) non-taxable allowance, not included in income or deductions if: 1. Cost is reasonable 2. Overtime ust work 2 or more hrs. before or after regular hrs. 3. Overtime is infrequent, less than 3 times/wk.
Meal allowance (RQ) non-taxable allowance, not included in income or deductions if: 1. Cost is reasonable 2. Overtime must work 2 or more hrs. before or after regular hrs. 3. Overtime is infrequent, less than 3 times/wk. 4. Reimbursed upon receipt
Meal allowance taxable allowance if overtime occurs more than 3 times/wk. Included in income and subject to all deductions.
Meal reimbursements for expenses incurred while working. Not included in income.
Clothing allowance (non-taxable) not included in income or deductions if: 1. Law requires 2. Protective clothing is required 3. Amount reimbursed is reasonable
Clothing allowance (taxable) included in income and subject to all deductions if: 1. Employee is free to wear what they want 2. No distinctive uniform 3. No safety requirements
Benefits dollar values attributed to something the employer provided or paid for on behalf of the employee.
Cash benefits included in income and subject to all deductions.
Non-cash benefits included in income for deductions purposes only, subject to C/QPP and taxes, not EI/QPIP.
Registered Retirement Savings Plan (RRSP) employer paid contributions, when paid with board/lodging and other remunerations, cash taxable benefit.
Registered Retirement Savings Plan (continued) employer paid contributions when separate from other remunerations, non-cash taxable benefit.
Common employer provided benefits 1. Group Term Life Ins. plans 2. Group sickness & Accidental plans 3. Private and Province Health Ins. plans 4. Employee Assistance plans 5. Gift and Awards 6. Cell phone/Internet 7. Parking 8. Automobile 9. Tuition 10. Loans
Group Term Life Ins. Plans paid by employer, non-cash taxable benefit to employee paid by employee, cash taxable benefit to employee
Group Term Life Ins. Plans (Retail Sales Tax) MB = 7%, ONT = 8%, QC = 9%
Retail Sales Tax (MB) 7% included in life insurance plans (self, optional, dependent), accidental death & dismemberment, and disability & critical illness coverage.
Group Sickness & Accident Plans Short term, Long term, and AD&D
Group Sickness & Accident Plans (Short & Long term) employer paid premiums, not taxable employer paid for president of organization only; non-cash taxable benefit to president.
Group Sickness & Accident Plans (AD&D) employer paid premiums, non-cash taxable benefit. Retail sales tax applies.
Private Health Ins. Plans (non-Quebec) employer paid premiums, not taxable.
Private Health Ins. Plans (Quebec) employer paid premiums, non-cash taxable benefit. Subject to 9% sales tax, QPP, and Quebec Provincial tax.
Private Health Ins. Plans employee paid premiums and reimbursed, cash taxable benefit.
Provincial Health Ins. Plans Imposed levies or taxes on employers (BC, MB, NFL, ONT, QC). Funded through tax revenues (AB, NB, NWT, NU, PEI, SASK, YT). Not taxable.
Employee Assistance Plans (counselling) employer paid directly to provider, not taxable. employer paid directly to third party, non-cash taxable benefit.
Employee Assistance Plans (Continued) employee paid and reimbursed, cash taxable benefit. Subject to sales tax - GST/QST/HST.
Gifts and Awards given in cash (gift certificates, gift cards, etc.), cash taxable benefit.
Gifts and Awards (non-Quebec) 1. No limit to number of gifts/awards given in yr. 2. Single $500 exempt/yr., not taxable 3. Over $500, non-cash taxable benefit.
Gifts and Awards (Quebec) 1. No limit to number of gifts/awards given in yr. 2. $500 exempt/yr. for each gifts and awards. 3. Over $500, non-cash taxable benefit.
Cell phones/Internet services employer paid for business related, not taxable. employee paid and reimbursed, cash taxable benefit.
Cell phones/Internet services (CRA) not taxable if: 1. Costs are reasonable 2. Basic plan with a fixed cost 3. Personal use doesn't result in additional fees
Cell phones/Internet services (RQ) not taxable if: 1. primarily for employers benefit 2. personal use doesn't result in additional fees
Parking employer pays for or part of, non-cash taxable benefit. Subject to GST/HST/QST/PST.
Parking (continued) not taxable if: 1. Physical disabled (free or subsidized) 2. Distinct requirement to have a parking space 3. Parking costs while away on business 4. Parking available to anyone (shopping center) 5. Scramble parking provided (1st come)
Tuition employer paid course (scholarship too), non-cash taxable benefit. employee paid and reimbursed, cash taxable benefit.
Tuition (continued) not taxable if: 1. Employer paid for position related course for enhancement 2. Employer paid for course benefiting the employer
Loans Types: Regular and Home purchase
Regular Loan no interest or lower interest rate than the gov't-prescribed rate, non-cash taxable benefit. Subject to C/QPP and Income tax. If forgiven - becomes a cash-taxable benefit.
Regular Loan not taxable if charged the gov't-prescribed rate or higher.
Home Purchase Loan monthly non-cash taxable interest benefit. No sales tax applicable. Subject to C/QPP and Income tax.
Autombiles employer owned/leased, non-cash taxable benefit based on personal use.
Automobiles (Quebec) employee required to keep log book. Give copy 10 days after end of year or 10th day following return of the auto.
Automobiles (continued) non-cash taxable benefit is the total of the standby charge + operating cost benefit - any employee reimbursement.
Terminal Charge a lump-sum payment due at the end of a lease because the lease costs were too low.
Terminal Credit a lump-sum payment an employer receives at the end of a lease because lease costs were too high.
Availability the number of 30 day periods the auto was available in the year.
Business Driving any business purpose driving; with clients and to/from home to point of call.
Capital cost cost of a vehicle including options, accessories, and sales tax paid by the employer towards purchase of the auto.
Employee Reimbursement amount the employee pays to offset the personal use of the auto.
Lease costs leasing costs plus all sales tax and associated costs (maintenance, excess KM, terminal charges, etc.). Doesn't include liability or collisions insurance.
Lump-sum Lease Payments payments made at the beginning or end of a lease, prorated over life of lease.
Motor Vehicle auto used on highways and streets, not a trolley, bus, or rails.
Operating cost benefit employee receives for costs associated with personal use (gas, repairs, maintenance, insurance, licenses, etc.), not including capital cost of owned auto, lease costs, and parking.
Personal driving KM made by employee for personal use (vacation travel, home to work, etc.).
Standby charge benefit employee enjoys when auto is available for personal use.
Taxes applicable to sales tax associated with capital or lease costs (PST, GST, HST, QST).
Created by: Moorebaier
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