Question

1. Employers are required to pay a slightly higher employment insurance premiums than employees. T or F

2. Pensionable earnings include the value of gifts and awards, including trips. T or F

3. Income taxes vary based on province of employment. T or F

4. Canada Pension Plan is designed to provide income for young workers who are temporarily unemployed. T or F

5. Income taxes can be calculated without the use of computer software.T or F

6. Income taxes are withheld from an employee's earnings based on all but the following:

• a. Province of employment

• b. Claim for personal exemption

• c. Reductions for employee contributions to a registered pension plan

• d. Province of residence

• e. Reductions for union dues deduction

• 7. The following is not an accepted method to calculate the amount of taxes to be with-held.

• a. Manual Calculations

• b. Use of pre-printed tables from CRA

• c. Telephone help service provided by CRA

• d. Online tax deduction calculator provided by CRA

• e. Use of tax formula tables incorporated into computer software

Answer 1

Answer:

1) The Statement is TRUE.

Explanation: Employment Insurance Premium, which is also called as EI Premiums are deducted from an employee's insurable earnings if that employee is in insurable employment during the year. Insurable employment means employment under a contract of service, that results in, Employer-Employee relationship. As per the rule, employers are required to pay a higher EI premiums than employees.

2) The Statement is FALSE.

Explanation: Pensionable Earnings are the earnings contributed by employees for their pensions. This may include:

• Basic Salary
• Overtimes
• Bonuses
• Commissions
• Statutory Payments like maternity or paternity or sick pay

Hence it does not include the value of gifts and awards, including trips as these are other taxable benefit from employment, whether in cash or non cash.

3) The Statement is TRUE.

Explanation: When we pay employment income such as salaries,wages, or commissions, to employees we have to determine employee's province or territory of employment so we can withhold the proper deductions, according to which the income tax will be calculated as the federal government collects the personal income tax on the behalf of all the provinces and territories.

4) The Statement is FALSE.

Explanation: Canada Pension Plan known as CPP is an earnings related public pension plan. CPP makes monthly payment to canadians and their families after retirement, disability or death. This is an canadian government's retirement income system. Hence it is not designed to provide income for young unemployed workers.

5) The Statement is TRUE.

The income taxes can be calculated without the use of computer software as in ancient times it is calculated on paper and right now also, we can calculate manually with the help of Income tax rules, regulation and heads after that we can put in software for rechecking the calculation.

6) Answer is (a)

Income taxes are withheld from an employee's earnings based on all but following the PROVINCE OF EMPLOYMENT.

Explanation: Province of employment means the province or territory in which the establishment of the company is located from where the employee's remuneration is paid, which will be helpful for personal Income tax calculations and other deductions.

7) Answer is (c)

The method of "Telephone help service provided by CRA" is not an accepted method to calculate the amount of taxes to be with-held.

Explanation: The amount of taxes can be calculated manually or via computer software but not telephonic as the telephone services are customer care services which provides software related services not calculation.