1. Payroll—A Dollar Earned
Personal Finance

2. Employee —a person hired to work for a business or person
Employment Standards
Employee —a person hired to work for a business or person
Employer —someone who pays for services provided by another person or company

3. Net Pay (take home pay) = total earned – deductions
Terminology
Gross Pay: the amount of an employee’s earning before any deductions are made
Net Pay (take home pay) =
total earned – deductions

4. Compensation Methods
Salaries: paid to office workers, teacher, supervisors, managers, executives, government workers, etc.
A fixed sum of money paid to an employee on a regular basis over a period of time
Wages: payments to workers for their labour, on an hourly, daily, or weekly basis, or by the piece
Commissions: paid to sales representatives

5. Federal Laws Income Tax Act Employment Insurance Act
Employment Insurance Act
Canada Pension Act

6. Provincial Laws Employment Standards Act Worker’s Compensation Act
Minimum wage
Hours of work—regular week is 5 days, 8 hours/day
Statutory holidays
Vacation pay—amount of vacation pay is equal to 2% of the annual gross pay for one week of vacation
Overtime—paid at a rate of 1.4 times regular wage
Maternity Leave
Paternity Leave
Worker’s Compensation Act

7. Provincial Employment Standards Act
Vacations with Pay Act
Labour Relations Act
Workplace Safety and Health Act

8. Social Insurance Number
Identifies every citizen in Canada
Ensures employees get proper credit for their contributions to Canada Pension, Employment Insurance and Income Tax
A person who is not a Canadian citizen or permanent resident of Canada will receive a SIN beginning with the number 9 and is authorized to work only for a particular employer

9. TD1 Form http://www.cra-arc.gc.ca/E/pbg/tf/td1mb/README.html
Determines and employee’s net claim code which is used by the employer to determine the amount of federal and provincial or territorial tax to be deducted
(fillable form)
(printable form)

10. Compulsory Deductions
Canada Pension Plan: every employee who is over 18 and under 70 years of age and working in Canada must contribute to the Canada Pension Plan
The employer contributes an equal amount to the employee’s contribution
Employment Insurance: designed to provide income to those workers who become unemployed through no fault of their own
The employer contributes 1.4 times the amount contributed by employees
Income Tax: amount of tax deducted is determined by net claim code

11. Paying Employees
Pay Period: daily, weekly, bi-weekly, semi-monthly, monthly
(calculator)
Rates of Pay: salary, wages (hourly rate, overtime rate, piece rate), commission and combination of salary and commission
Overtime Rate: 1.5 times regular rate
Regular and Overtime Hours
Gross Earnings: an employee’s earnings before deductions

12. Payroll Terms Collective Agreement Union Dues
Gross pay: total earned by employee
Net Pay = total earned – deductions
Canada Pension Plan
Employment Insurance
Registered Retirement Plan

13. Payroll Terms (cont’d)
Compulsory deductions: C.P.P., E.I., Income Tax
Voluntary deductions
Registered Retirement Savings Plan
Manitoba Health Insurance
Extended Insurance
Group Life Insurance

14. Payroll Deductions Compulsory Deductions: Other Deduction Options:
CPP (Canada Pension Plan) (max. $2,564/year)
EI (Employment Insurance) (max. $836/year)
Income Tax
Other Deduction Options:
RPP (Registered Pension Plan)
Health/Dental Plans
Union Dues (compulsory)

15. Example—Bi-Monthly Pay
Gross Pay
$2,236
Deductions:
Income Tax
490
C.P.P
104
E.I. 36
Group Life Ins. and LTD 40
Group Ins. (employer paid benefit) 40
Total Deductions
$670
Net Pay
$1566

16. Gross/Net Pay Example Monthly Yearly Gross Pay 7778.92 93347.04
Deductions
C.P.P
359.78
E.I.
125.32
Income Tax
R.P.P
957.14
Disability insurance
156.24
Life Insurance
24.26
291.12
Union Dues
120.75
1449
Dental/Health
229.50
2754
Total Deductions
Net Pay

17. Calculations Taxable Earnings
Gross earnings – (union dues + RPP) = Taxable earnings
Net Earnings
Gross Earnings – Deductions = Net Earnings

18. Paying Employees 3 usual methods: Cash Cheque
Bank, credit union, or trust company direct deposit

19. Remitting Deductions
Once a month the employer must remit (send in) the deductions taken from the employees’ wages and salaries to the proper agencies
Income tax, C.P.P. and E.I. deductions are sent to the Receiver General of Canada by the 15th of the following month
Other deductions such as union dues, life insurance premiums, etc. are remitted to the appropriate agencies

20. Assignment
Add your name to the payroll journal and enter the gross amount you would earn for two weeks based on the occupation you chose to research in the Earning Income assignment
If a yearly salary was listed, divide the amount by 26