PF1 Exam Training Practice Tests (National Payroll Institute Payroll Fundamentals 1Exam)]

Question 1

Which of the following types of payments made by a private organization would not be subject to all statutory deductions?

A. Directors' fees B. Vacation pay when no time was taken C. Performance bonus D. Retroactive adjustment

Correct Answer: A

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Question 2

Rosa joined Avion Electronics in April 1983. Her employment was terminated on November 30, 2015 and she was paid a $62,500.00 retiring allowance. Rosa joined her company's pension plan in 1986 and was fully vested on termination of employment. Calculate the non-eligible portion of the retiring allowance.

Correct Answer:

$32,000.00 non-eligible portion
Explanation:
CRA requires separating a retiring allowance into an eligible and non-eligible portion. The eligible portion is the maximum that can be transferred to an RRSP/RPP under the special rules (without using regular RRSP room). The formula is: $2,000 for each year (or part-year) of service before 1996, plus an additional $1,500 for each year (or part-year) before 1989 in which the employee had no employer pension/DPSP benefit vested at the time of payment (or previously paid).
Rosa worked from 1983 to 1995 (inclusive) for pre-1996 service: 13 years × $2,000 = $26,000.
For the extra pre-1989 amount: she joined the pension plan in 1986 and was fully vested when paid the retiring allowance in 2015, so 1986-1988 do not qualify for the extra $1,500. However, 1983-1985 were years before 1989 when she had no vested employer pension benefit, so 3 years × $1,500 = $4,500.
Eligible portion = $26,000 + $4,500 = $30,500.
Non-eligible portion = $62,500 # $30,500 = $32,000.

Question 3

An employee in Ontario was paid a $25,000.00 retiring allowance. The eligible portion was $15,000.00 and was transferred to the employee's Registered Retirement Savings Plan (RRSP) by the employer. Calculate the income tax on the non-eligible portion.

A. $1,000.00 B. $5,000.00 C. $7,250.00 D. $2,000.00

Correct Answer: D

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Question 4

Select the correct order of priority for withholding payroll deductions from an employee's earnings.

A. Company-compulsory deductions, union deductions, statutory deductions, legal deductions, voluntary deductions B. Union deductions, statutory deductions, legal deductions, company-compulsory deductions, voluntary deductions C. Statutory deductions, legal deductions, union deductions, company-compulsory deductions, voluntary deductions D. Statutory deductions, union deductions, legal deductions, company-compulsory deductions, voluntary deductions

Correct Answer: C

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Question 5

Tanya submitted a letter of resignation to her employer on April 2 of the current year advising that she would be resigning her position effective April 27 for the pay period ending April 28. What date will appear in Block
11 of Tanya's Record of Employment?

A. April 30 of the current year B. April 2 of the current year C. April 27 of the current year D. None of the above

Correct Answer: C

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Question 6

Expense reimbursements are:

A. Dollar amounts the employer pays for the work an employee performs B. Dollar amounts paid to employees to cover expenses that they incur while performing their job C. Dollar amounts paid to employees for the use of their personal property for business purposes D. Values attributed to something the employer has either provided to an employee or paid for on an employee's behalf

Correct Answer: B

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Question 7

The capital cost of an employer-owned vehicle includes:

A. The cost of the vehicle, vehicle options, accessories, sales tax and additions that add to depreciation value B. The cost of the vehicle, sales tax, customized heavy-duty suspension and power winches to meet requirement of employment uses C. The cost of the vehicle, vehicle options, specialized equipment to meet requirements of employment D. The cost of the vehicle excluding sales tax

Correct Answer: A

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Question 8

Helen is reimbursed for the cost of the protective clothing that is legally required for her job. The clothing she bought isnot supported by receiptsand is a reasonable reimbursement amount. This is considered:

A. A taxable allowance B. A non-taxable allowance C. None of the above D. A cash taxable benefit

Correct Answer: A

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National Payroll Institute Payroll Fundamentals 1Exam - PF1 Exam Practice Test