ACCG20009 Fundamentals of Payroll Accounting

ASSIGNMENT #1 = 100 Marks

Due Date: Refer to the Course Schedule in SLATE

(submissions are expected at the beginning of class)

Student(s) Name:
Note: You may work with a partner and then submit one assignment for the both of you.

This assignment is worth 15% of your final grade!

INSTRUCTIONS:

The objective of this assignment is to research relevant

payroll regulations for the cases assigned and through your
responses, demonstrate mastery of the content provided.

Forms, Publications & Links are provided in SLATE.

TYPE your answers under each question and submit this

assignment in HARD copy with supporting documents.

Assignments submitted late must be e-mailed and will be

penalized 10% per day. Assignments submitted more than
one week late will NOT be accepted.

NOTE: copying and pasting pages of government information

provided online, will not be graded. Clearly detail and format
answers to case questions by citing legislation, rationalizing your
responses and/or providing detailed calculations where required.

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Case 1 – Pregnancy & Parental Leave (8 Marks)

Jake & Maria Johnston are expecting twins. Maria has been with her
employer for 2 years and Jake has been with his employer for 5 years.

They would like to take the maximum allotted time available to be with their
new children. They need your help to understand what they are entitled to,
the limitations set by the ESA and the compensation provided by EI.

a) Identify what types of leave Maria is entitled to and the qualifying

conditions of such leave.

b) Identify what options are available to Jake. Further, outline how

many weeks in total both Maria & Jake can take off between them
and how many of those weeks are compensated for in total.

c) If Maria & Jake had adopted children instead, what are their total
entitlements for both weeks off and weeks compensated?

Case 2 – Family Caregiver/Medical Leave (5 Marks)

Stella St. John’s father has been terminally ill for some time. Of late, it is
the medical specialist’s opinion that he has a limited amount of time left.

a) Given the fact that Stella’s brother would also like to spend time with
his father, outline;

- the number of weeks the siblings are entitled to under ESA

- the number of weeks the siblings are covered under EI
- specific conditions that apply to their eligibility and
requirements on how they can take these leaves

b) What are some general employer responsibilities when it comes to

employees taking and returning from leaves of absence?

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Case 3 – TD1 & TD1-WS (10 Marks)

Jesse James, age 66, receives $37,000 per annum from private pension
income due to his past tenure with Brewers Limited and currently earns
$30,680/year working part-time for Home Depot.

Jesse has decided to defer his CPP income until he reaches the age of 70, so
he is presently making CPP contributions through employment.

His wife Stacey, age 55 earned $9,600 this year walking dogs and takes care
of their impaired child Melanie, age 27, whom they support in a local group
home. (Note: Melanie qualifies for a T2201 Disability Certificate).

Melanie earned $12,400 this year, helping out at the corner bakery. She has
also been taking part-time courses at a local college and paid $900 in tuition.

a) Using a TD1 & TD1-WS, determine what Federal Claim Code Jesse
James would fall under given the above details.

ENSURE THAT YOU SUBMIT APPLICABLE FORMS

Claim Code =

b) Calculate the statutory deductions that Home Depot would withhold at

source, based on a weekly pay cycle.

i) Federal Income Tax = $

ii) CPP = $

iii) EI = $

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Case 4 – Allowances & Expenses (7 Marks)

Dale & Donna Becker are both sales people working for a large
pharmaceutical company with a branch office in North Bay.

Due to their expertise, the company has asked them to relocate to Toronto as
soon as possible. They have been given an allowance of $4,500 to
compensate them for any inconvenience.

The following items have been diarized to date by Dale & Donna as they
relate to their move over the past two weeks;

Transportation & storage of household items $2,000

Repairing new residence & creating a home office $3,500
Travel expenses (mileage at prescribed rates) $150
Hotel accommodations – 12 days $1,500
Meals, phone calls & incidentals – 12 days $500
Cleaning & painting of old residence $6,000
Legal/agent fees (for both old & current premises) $1,000
Misc. – disconnection of cable, long distance, etc. $250

Based on the above information;

a) Indicate which item(s) above are NOT eligible under the Income Tax
Act. Further, what additional expenses could be considered as
eligible? (Hint: reference a T1-M form)

b) What minimum condition(s) does CRA indicate must be met, when

employers are compensating employees for moving expenses?

c) Assuming that they retain receipts for all their eligible expenses,
what would Dale & Donna have to evaluate with regard to any
personal income tax consequences on the $4,500 advance?

Explain your response and justify it numerically.

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Case 5 – Earnings & Benefits (8 Marks)

Shirley, who is 17 years old, works at Papa’s Pizza Parlour for the summers,
but come fall, she goes back to school. She earns minimum wage and this
summer, regularly worked 25 hours a week for 16 weeks.

Shirley also worked an additional 45 hours in overtime throughout the

summer to ‘cover’ for other employees shifts, which she ‘banked’ and has
not yet been compensated for.

In addition, Shirley had not taken or been paid for any vacation time, which
she is entitled to under the minimum of the ESA.

a) Calculate the gross amount of earnings that Papa would have had to
pay Shirley, for the past summer that she worked for him.
Detail your answer with appropriate calculations.

Total Gross Earnings = $

b) Due to her outstanding service and for continually exceeding safety

standards, Papa decided to give Shirley an ‘award’ in the form of a
one year paid subscription to an internet service (valued at $375) for
use in her educational needs and a ‘voucher’ for a pizza party, for 10
people at his restaurant (worth $250).

i) Determine what amount is subject to tax, and state which source

deductions may or may not be applicable to these gifts/awards.

ii) If Papa had given Shirley a $375 gift card to Staples for school
supplies instead, what CRA ‘rules & deductions’ would apply now?

Your responses should clearly cite CRA policies.

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Case 6 – Vacation Accrual (7 Marks)

Dale worked full-time for his employer for almost 2 years and decided to resign
in hopes of travelling abroad for a year. Dale’s vacation entitlement was
accrued during his tenure, based on the minimum designated by the ESA.

During his employment, he had taken only two weeks of vacation (one week in
November of 2014 & one week in November of 2015).

The vacationable year of the company is designated from Sept 1st to Aug 31st.

Dale’s year-to-date earnings were as follows;

Sept 1, 2013 to Aug 31, 2014 = $10,000 (employment start date Mar 1, 2014)
Sept 1, 2014 to Aug 31, 2015 = $22,500
Sept 1, 2015 to Aug 31, 2016 = $15,000 (employment end date Dec 31, 2015)

Required:

a) determine what vacation time (in days) is outstanding

b) determine what vacation pay (in dollars) is accrued

Detail your answers with appropriate calculations.

Total Vacation Days Outstanding = #

Total Vacation Pay Owing = $

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Case 7 – Maxing CPP & EI (15 Marks)

Cardinal Co. has 4 employees who are paid on a monthly basis.

Payroll information for one monthly frequency is listed below;

Year-To-Date
Payment due on Payment due on
Employee Salary At
November 30 December 31
October 31
B. Strata $28,000 $3,000 $2,000
A. Connor $44,000 $5,000 $7,000
P. Singh $50,000 $4,000 $6,000
K. Black $52,000 $8,000 $1,000

Required: Determine CPP & EI deductions for November & December.

Employee Employment Insurance Canada Pension Plan

November December November December

B. Strata $ $ $ $

$ $ $ $
A. Connor

$ $ $ $
P. Singh

$ $ $ $
K. Black

NOTE: marks will not be granted unless ALL appropriate calculations are
attached to back up your answers.

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Case 8 – Irregular Payments (15 Marks)

Charlie, a salesman, earns $52,300 per annum. He is paid semi-monthly and
qualifies under Claim Code 3.

On May 1st he received a commission payment of $2,750 and on October

31st, he received another in the amount of $8,250.

These payments were made on a separate cheque and issued after his regular
semi-monthly earnings.

Required:

Create an earnings record for Charlie supporting his payroll deductions, (refer to
Lesson 5 for templates). In addition, specifically detail calculations for CPP, EI &
Taxes that must be deducted for each of the commission payments.

NOTE: required calculations using the ‘bonus method’ for income tax can
be referenced in the Employer Guide to Payroll Deductions & Remittances

Answers: (input deductions on the commission payments only)

May 1st Oct 31st

CPP = $ $

EI = $ $

Total Taxes = $ $

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Case 9 – Group Benefits (5 Marks)

This questions addresses; Medical Coverage, Life Insurance & Wage Loss
Replacement Plans / Income Maintenance Insurance Plans from Lesson 2.

Emily’s employer offers coverage under a Group Health Services Plan for
Medical, Dental & Vision and some additional Insurance Benefits from Sun
Life Assurance as follows;

Life Insurance, Accidental Death & Dismemberment and Short/Long-Term

Disability Insurance. The STD (short-term disability) plan is in place
specifically for cases of illness or disability, for a period of time less than 3
months. The LTD (long-term disability) plan is in place specifically for cases
of illness or disability, for an extended length of time, which would limit an
employee’s ability to go back to work.

Required:

a) Which benefit(s) in this overall package are NOT taxable to

employees, if offered as a group plan?

b) Which benefit(s) in this overall package are taxable, even if offered as

a group plan?

c) With regard to the disability insurance coverage;

To ensure any potential disability income from the insurance company are
not personally taxable to Emily, should she ever require it, (ie, if a claim was
made on the policy), what should she and her employer consider?

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Case 10 – Calculating Net Pay (20 Marks)

Sally works for Nikko Enterprises and earns $990 bi-weekly. She has just
received a 2% pay increase, effective this current pay period. In addition,
Sally is entitled to five weeks’ vacation pay, which is paid each pay period.

Each pay, Sally also receives a group medical benefit of $40, which is shared
50/50 with her employer. She also receives an annual group term life
insurance benefit of $1,250. Both plan values include applicable sales tax.

In addition, the following are other deductions from Sally’s pay, each bi-
weekly period; $12 for union dues, $28 for a company loan repayment and
$7 toward an employee social fund.

Assume income taxes are calculated at a combined rate of 18%.

Required:

1) Determine Sally’s Net Pay for one bi-weekly pay period, and
2) What is the amount owing to the CRA for statutory deductions (PD7A)

NOTE: marks will be allocated for clearly labeling and providing

calculations for EACH STEP of the process models outlined (Lessons 3&5)

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