1. Welcome Payroll Law in Canada (Manitoba Specific) Disclaimer: All information provided is from Canada Revenue Agency and Canada Labour Department. Confer with your tax and legal counsel for specific information pertinent to your company. 1 Presented by Pamela Shull

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3. Objectives Understand the basics of major federal and provincial laws regarding tax withholding and reporting Comprehend basic labour and employment standards that affect payroll processing Undertake payroll document record retention Audit-proof your documentation Know the steps for special situations that can incur penalties, interest and fines Apply critical, need-to-know legal mandates that protect your organization 3 WB - 1

4. Who Does What? A/P Goods/Supplies Contractors Payroll Compensation Withholdings H/R Administrating Tracking Disciplining 4

5. Federal? Provincial? Territorial? Which law do you follow Federal Industries that are inter-provincial or inter-national in scope Includes: banking, transportation, radio and television, Provincial Trade unions, hours of work, work comp, paid vacations Relationship between employer and employee Territory Under federal jurisdiction Administered by Department of Indian and Northern Affairs and Northern Development 5

6. Federally Regulated Industries 6 Banks Marine shipping, ferry and port services Air transportation, including airports, aerodromes and airlines Railway and road transportation that involves crossing provincial or international borders Canals, pipelines, tunnels and bridges (crossing provincial borders) Telephone, telegraph and cable systems Radio and television broadcasting Grain elevators, feed and seed mills Uranium mining and processing Businesses dealing with the protection of fisheries as a natural resource Many First Nation activities Most federal Crown corporations Private businesses necessary to the operation of a federal act

7. Canadian Payroll Basics Determine your status Opening a payroll account Hiring employees Calculating compensation Calculating deductions Remitting deductions Completing and filing information returns Employer’s requirements Payroll ‘s responsibilities 7 WB - 2

8. 8 8 Website References and Resources Canadian Master Labour Guide, pub. CCH Canadian Master Tax Guide, pub. CCH Labour and Employment Issues www.hrsdc.gc.ca – for basic Employment Standards: type “Employment Standards” into search tool mechanism www.hrsdc.gc.ca www.gov.mb.ca – choose topic from menu www.gov.mb.ca Tax Issues www.cra.gc.ca – use search tool for specific tax questions www.cra.gc.ca http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/menu- eng.html - for specific payroll tax issues (T4001, T4130 Publications) http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/menu- eng.html 8

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17. RECORDKEEPING FOR EMPLOYEES AND CONTRACTORS? PAGES 3 - 7 Section 1 17

18. Required Recordkeeping On all employees keep: Hours worked by each employee CPP contributions, EI premiums and taxes Form TD1 ( http://www.cra-arc.gc.ca/formspubs/frms/td1-eng.html ) Quėbec requires Form TP1015.3 Retention requirement Taxes: Six years from the end of the last tax year to which they relate. Employment: determined by province/territory – typically 3 years. 18 WB-3 - 5

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20. Determine Worker Status Canada 4-point Test 1.Control 2.Ownership of tools/equipment 3.Chance of profit or risk of loss 4.Integration into the company 20 WB – 6 - 7 Behavioral Financial Control and Financial Responsibility Relationship of the parties

21. Recordkeeping Requirements Contractor Contract for services agreement or purchase order Proof of business Invoices Tax Reports and deposits (T4A slips, if applicable) 21 Employee Employment Contract of services or job description TD1 or TP1015.3-V Time or tracking records Payroll records of payments, withholdings, remittances, T4 slips

22. LABOUR LAW ISSUES PAGES 8 - 17 Section 2 22

23. Minimum Wage - Manitoba Currently: $11.00 per hour in most industries Student: no sub-minimum wage allowed Exclusions: employees working in domestic service less than 12 hours a week, or those in a federal or provincial government-sponsored training program. Construction exemption: There are separate minimum wage rules for heavy construction sector and the industrial, commercial and institutional (ICI) sectors of the construction industry. 23 WB-8

24. Minimum Wage - Federal Currently: $7.50 Minimum wage rate applicable in regards to employees under federal jurisdiction is the general adult minimum wage rate of the province or territory where the employee is usually employed 24 WB-8

25. Minimum Wage – By Province 25 ProvinceMinimum WageOther Information Alberta11.20 Adjusted annually – $12.20 Oct 1 – Salaried exempt $486 – liquor server abolished British Columbia10.85 Adjusted Sept 15 of each year Manitoba11.00 New Brunswick10.65 Newfoundland/Labrador10.50 Northwest Territories12.50 Adjusted annually on Jun 1 Nova Scotia10.70 Adjusted annual on April 1 Nunavut13.00 Ontario11.25 $11.40 October 1 Prince Edward Island10.75 October 1 - $11.00 Québec10.75 Saskatchewan10.50 $10.72 Oct 1 Yukon11.07 Adjusted annually on Apr 1

26. 26 Who Is Allowed To Be Salaried Without Overtime (exempt)? Managers, superintendents, and employees who carry out management functions are exempted from hourly remuneration (50% rule applies). Architects, dentists, engineers, lawyers, and medical doctors are also excluded. Special hours of work regulations in several industries exempt or set different standards for certain employees. WB-9

27. Salaried Exempt From Overtime The following employees are excluded from the standard hours of work and overtime: Employees who perform management functions primarily and Employees who substantially control their hours of work and earn twice the Manitoba average industrial wage 27

28. Non-Management Duties Clerical, manual labour Routine, repetitive, directed-type work Front line workers Support staff 28

29. 29 Salaried – Purple Squirrel – Subject to Overtime Pay Employee is paid salaried but does not qualify for overtime exemption. Employee salary is for all non-overtime hours up to 40. Sharon’s salary is $500 per week. One week she works 46 hours. $500 ÷ 40 = $12.50 $12.50 x 1½ = $18.75 $18.75 x 6 = $112.50 $500 + $112.50 = $612.50

30. Federal Hours of Work Rules Minimum 3 hour Overtime: after 8 in a day or 40 in a workweek Averaging allowed Lieu time allowed Meal period – 30 minutes after 5 consecutive hours of work 30

31. Manitoba Hours of Work Rules Minimum 3 hours 8 per day; overtime paid after 40 Averaging allowed upon approval Flex-time allowed with agreement In some cases, employees are not entitled to overtime wages because they have substantial control over their hours of work and earn at least twice the Manitoba Industrial Average Wage. Meal period 30 minutes for 5 consecutive hours of work Rest periods 24 consecutive hours in every work week 31

32. How To Count Hours For Overtime – Per Week* SunMonTueWedThurFriSatTotalRegularOvertime 88888848408 85581038362 106 6 42366 76877843403 32 *No matter what your pay cycle is.

33. Daily Overtime SUNMONTUESWEDTHUR FRISAT Hours Worked 810613 Regular8868 1½25 33 On Thursday, after working 8 hours per day an employee must be paid time-and-a-half for the next 5 hours worked. This applies even if the employee works less than 40 hours in a week. Total hours worked in week: 37 Hours at time-and-a-half: 7

34. Weekly Overtime SunMonTuesWedThursFriSat Hours Worked 878877 Regular878872 1½5 34 Total hours worked in the week: 45 Hours paid at time-and-a-half: 5

35. Construction Industry The construction industry has several minimum standards that are different from other industries. Termination, general holidays and minimum wage are all handled differently in this industry. The Construction Industry Wages Act sets the minimum wage for tradespeople and other construction workers in the industrial, commercial, institutional sector (ICI) and the heavy construction sector. Heavy Construction and Wage Schedule The Construction Industry Wages Act, along with The Employment Standards Code, sets wages and working conditions on most Manitoba construction sites. The heavy construction sector has its own minimum standards and wage levels. 35

36. Construction Industry ICI Construction and Wage Schedule The Construction Industry Wages Act, along with The Employment Standards Code, sets wages and working conditions on most Manitoba construction sites. The industrial, commercial and institutional (ICI) construction sector has its own minimum standards and wage levels. 36

37. Federal Hours of Work Rules Minimum 3 hour Overtime: after 8 in a day or 40 in a workweek Averaging allowed Lieu time allowed Meal period – 30 minutes after 5 consecutive hours of work 37 WB-10

38. Minimum 3 Hour Rule – Manitoba When an employee is required to report to work for a shift of 3 hours or longer but works less than 3 hours, they must be paid whichever of the following amounts is the highest: 3 hours at minimum wage or the employee’s regular wage for the time worked Exceptions to the rule: Employees whose regular shift is 3 hours or less Where the cause of the employee not being able to work at least 3 hours was beyond the employer’s control. 38

39. Minimum 3 Hour Rule Employees scheduled to work must receive a minimum of $33.00 for showing up for work regular pay for total hours worked – whichever is higher Example: Employee is paid $12 an hour. After 2 hours of work is sent home. Employee must be paid $33.00 because $12 times 2 hours is only $24.00. Example: Employee is paid $20 an hour. After 2 hours of work employee is sent home. Employee must be paid $40.00 ($20 times 2) because it is higher than the minimum call-out pay of $33.00 39 WB-10

40. Jan 1, 2012 -Changes Flex-time agreements – Employees who work more than 35 hours can enter into an agreement to flex their schedule up to 40 hours with employer approval. Overrides daily overtime. Averaging agreements – For retail and hospitality industries – Must be approved by Director of Employment Standards – Can be averaged over a period of time up to 4 weeks. Cannot average more than 40 hours per week. Usually based on pay cycle. Employees must agree. Schedule must be adhered to unless extenuating circumstances apply 40

41. Averaging With Averaging Agreement – hours of work to be averaged over a period of one, two, three or four weeks. Employees may agree to work up to 12 hours in a day, averaging 40 hours in a week, without being paid overtime RULES: – Be in writing – Specify number of weeks over which hours will be averaged – Specify work schedule for each day – Specify number of times agreement may be repeated – Specify start and end date of agreement – Be signed by employer and employee before start date 41

42. Lieu/Bank Time - Manitoba Must have agreements with employees Allowed to take the time off within 3 months of time worked – unless Director of Employment Standards authorizes a longer period – if not taken must be paid out Employer must schedule time-off during regular hours Must be banked at time and a half for all hours worked over 40 in a workweek Recordkeeping must accurately depict worked hours, accounting for the hours and when the hours were taken subsequently 42

43. Lieu/Banked Time Rules Examples of the requirement to use up banked time within 3 months of the end of the pay period are as follows: 43 Overtime Worked Pay Period EndsBanked Time To Be Taken By June 1June 30September 30 August 11August 12November 12 September 15 December 15

44. Lieu Time Bank Pay Cycle of Hours Worked Over 40 Straight Time Hours Overtime Hours ValueDate Pay or Taken By 1/15/155$100.00Determined by agreement 1/31/15Paid 40 hours in check 4 worked – 6 banked $120.004/30/15 44 Employee’s rate of pay is $20 per hours. Employee normally works 35 hours per week. Employee did not work over 8 in any day. Pay cycle for 1/15 employee worked 40 hours. Wanted to bank lieu time. Pay cycle for 1/31 employee worked 44 hours. Wanted to bank lieu time for overtime hours.

45. Incentive Pay with Overtime 2-step process: 1.Calculate the hourly wage – incentive pay is divided by the total hours worked in the pay period. 2.Calculate the regular and overtime pay – based on rate determined in first calculation Incentive Pay= Hourly Wage Total Hours www.gov.mb.ca/labour/standards/doc,overtime- incentive-paywww.gov.mb.ca/labour/standards/doc,overtime- incentive-pay,factsheet.html 45

46. Wage Calculation for Commissions Commissions salesperson who is paid once a week earned $1000 commission and worked 50 hours $1000 / 50 = $20.00 $20 x 40 hours = $800 $20 x 1.5 = $30 $30 x 10 hours OT = $300 $800 + $300 = $1100 46

47. Wage Calculation for Incentive Pay Employee earns $15.00. Company pays employee $1.00 per hour for on call pay. Employee is on call for 24 hours. With on call time – employee physically works 43 hours. No day is over 8 in a day. $15 x 43 = $645.00 $645 + 24 = $669.00 $669.00 / 43 = $15.56 $15.56 x.5 x 3 = $23.34 $669 + 23.34 = $692.34 47

48. Flat Rate Employees (mechanics, auto repair, etc) A mechanic who is paid once a week earns $40 for each brake job completed. Mechanic does 30 brake jobs and actually works 48 hours. Total pay for the 30 brake jobs is $1,200. $1200 / 48 = $25 $25 x 40 = $1000 $25 x 1.5 = $37.50 $37.50 x 8 = $300 $1,000 + $300 = $1300 48

49. Averaging With Averaging Agreement – hours of work to be averaged over a period of one, two, three or four weeks. Employees may agree to work up to 48 hours in a week, without being paid overtime Employers may schedule 4 days at 11 hours a day - requires Director approval. RULES: – Be in writing – Specify work schedule for each day – Be signed by employer and employee before start date – Be approved by the Director of Labour Standards 49

50. Training Time - Ontario Time spent by an employee in training that is required by the employer or by law is counted as work time. For example, where the training is required because the employee is a new employee or where it is required as a condition of continued employment in a position, the training time is considered to be work time. Time spent in training that is not required by the employer or by law in order for an employee to do his or her job is not counted as work time. For example, where an employee hoping for a promotion with the employer takes training in order to qualify for it, time spent taking the training is not considered to be work time. 50

51. Travel Time - Ontario Commuting time is the time it takes an employee to get to work from home and vice-versa. This is not counted as work time for the purposes of the ESA. However, there are a number of exceptions to this rule. If the employee takes a work vehicle home in the evening for the convenience of the employer, the work time begins when the employee leaves home in the morning and ends when he or she arrives home in the evening. If the employee is required to transport other staff or supplies to or from the workplace or work site, time so spent must be counted as work time. If the employee has a usual workplace but is required to travel to another location to perform work, the time traveling to and from that other location is counted as work time. Time spent travelling during the course of the workday is considered to be work time. 51

52. Federal Stat Holidays New Year's Day Good Friday Victoria Day Canada Day Labour Day Thanksgiving Day Remembrance Day Christmas Day Boxing Day (December 26). 52 WB-12-13

53. Manitoba Stat Holidays New Year's Day Louis Riel Day Good Friday Victoria Day Canada Day Labour Day Thanksgiving Day Christmas Day 53 WB-12-13

54. Remembrance Day Only certain types of industries are allowed to work on Remembrance Day. If employees do not work on Remembrance Day – it is not “required” they receive public holiday pay. However, many companies do pay it as a common practice. Employees who work on Remembrance Day must be paid time-and-a-half if they work at least half of a normal work day. In addition, they also receive a regular day’s pay for working on Remembrance Day, or 5% of their gross earnings in the 28 days before Remembrance Day if their hours vary. Employers may not substitute another day for Remembrance Day. 54

55. Public Holiday – Manitoba If employee works on holiday: – 1½ times regular rate plus regular wages (unless an exception applies) or – Regular rate for hours worked and receive another day off within 30 days with public holiday pay. If holiday falls on non-working day – Employee can substitute another day off with pay or receive public holiday pay for the holiday General Holiday pay Calculation – 5% of employee’s total wages for four-week period immediately before the holiday Criteria – must work scheduled day before and after holiday to receive holiday pay 55

56. Exceptions To The Rule The exception is for employers operating a gas station, hospital, hotel, restaurant, place of amusement, continuously operating business, climate-controlled agricultural business or a seasonal industry (excluding construction) or those employing domestic workers. These employers can pay regular wages for work on the holiday if they provide another day off with general holiday pay, within the next 30 days. If employers and employees agree, the day off may be taken sometime before the employees' next annual vacation. 56

57. Exceptions To The Rule Sometimes employers and employees would rather move a general holiday to a different day. The employer, with the written agreement of the majority of the employees, or by their collective (union) agreement can choose to substitute a different day in the place of a general holiday as long as the substituted day off is within 12 months of the general holiday. For example, if December 27 is substituted for Victoria Day, Victoria Day becomes a regular workday and December 27 is deemed a general holiday. 57

58. Wages Included In Stat Holiday When calculating public holiday pay, gross regular wages include: Regular earnings Commissions Bonuses and gifts that are non-discretionary or that are related to hours of work, production or efficiency Allowances for room and board Does not include overtime 58

59. Stat Holiday Pay Calculation Employees who consistently work the same number of hours get one regular work day’s pay as general holiday pay. For example, an employee who always works 8 hours, 5 days a week, every week would get their regular wages for 8 hours as general holiday pay. For employees whose hours of work or wages vary, general holiday pay is calculated at 5% of the gross wages (not including overtime) in the 4 week period immediately before the holiday. For example: an employee who works varying hours each day, and earned $1200 in the 4 weeks before the holiday, is entitled to general holiday pay of $60 ie. $1200 ×5%=$60 59

60. Construction Industry Holiday Pay In the construction industry employees are still entitled to general holiday pay. Employees working in the construction industry receive 4% of their gross earnings as general holiday pay, which is often paid on every cheque instead of on the general holiday. For more information see the Construction industry fact sheet.Construction industry 60

61. Stat Vacation Time and Pay After 1 year of service within 10 months of entitlement – 2 weeks time – 4% of gross annual pay After 5 years of service – 3 weeks time – 6% of gross annual pay Gross annual wages include – All regular wages and any general holiday pay, commissions, bonuses tied to productivity and any other wages paid as compensation for regular hours of work. – Does not include: overtime, wages in lieu and previous year’s vacation wages 61

62. Common Anniversary Date Employers can choose to have a common anniversary date, so all employees receive their new vacation entitlements at the same time. Because all employees earn vacation pay from their first day of work, new employees will receive the portion they earned from the day they started and the common anniversary date. For example: if an employer establishes July 1 as the common anniversary and new employees starts work on January 1, new employees will have worked ½ a year on the common anniversary date. These employees must receive ½ of their vacation time and 4% of their earnings up to July 1 as vacation pay. 62

63. Final Vacation Pay Calculation An employee started employment on January 1, 2015 at a salary of $500 per week plus a $2500 bonus, earning a total of $28,500 in 2015. He earned 2 weeks of vacation time for 2015 plus 4% on the total gross wages, which equals $1140.00 If the employee takes 1 week of vacation with half of the vacation pay in February 2016 and quits on March 31, 2016 the employer still owes the employee $570 vacation pay earned in 2015, plus 4% of total gross wages earned between January 1 and March 31, 2016. 63

64. Sample Calculation Period for which vacation pay claimed Gross Wages earned during this Period Total Vacation Pay earned during this period Total Vacation Pay paid for this period ***Total Vacation Pay Owing for this Period Jan 1, 2014 – Dec 31, 2014 $28,500$1140$570 Jan 1, 2015 – Mar 31, 2015 (12 weeks regular pay) $6,000$ 240$0.00$240 Total Vacation Pay Owed $810 64 ***Total Vacation Pay Owing = Total Vacation Pay Earned – Total Vacation Paid

65. Maternity/Parental Leave - Manitoba Pregnancy Qualifying period – 7 months of service Length of leave – 17 weeks Seniority/Benefits – included Parental Length of leave – 37 weeks Seniority/Benefits included 65 WB-15

66. Bereavement Leave - Manitoba Eligible after 30 days of service 3 days unpaid time off Family members: children, stepchildren, parents, grandparents, spouses, common law spouses, brothers, sisters, step-siblings, aunts, uncles, nieces and nephews. 66 WB-16

67. Family Leave - Manitoba Eligible- 30 days of service Time: 3 days – unpaid Use – deal with family responsibilities or personal illness Protected leave 67

68. Family Medical Leave (Compassionate Care Leave) Policy and Procedures Up to 8 weeks to provide care or support to family member for serious medical condition with significant risk of death within 26 weeks Medical certificate required within 15 days after employee’s return to work Employees under federal jurisdiction entitled to take FML regardless of length of service Cannot suspend, discipline, terminate, lay-off, or demote an employee for taking FML Must be reinstated to former position, salary and benefits 68

69. Changes to Compassionate Care Leave - Federal January 3, 2016: Duration of compassionate care leave extended Compassionate care leave has been extended for Canadians working in the federal jurisdiction who provide care or support for a family member, who has a serious medical condition with a significant risk of death within 26 weeks as certified by a qualified medical practitioner. Specifically, the maximum duration of unpaid compassionate care leave has been extended to 28 weeks, from the previous 8-week period. Further, the period during which benefits can be taken is expanded to 52 weeks (up from 26 weeks). The employee’s job is protected while taking this leave. Individuals may be eligible to receive compassionate care benefits under the Employment Insurance Program. 69

70. Family Caregivers Bill Act – April 29, 2014 The new legislation -- the sixteenth government bill to pass since February 2013 -- builds on the existing Family Medical Leave by creating three new job-protected leaves:Family Medical Leave Family Caregiver Leave: up to eight weeks of unpaid, job- protected leave for employees to provide care or support to a family member with a serious medical condition. Critically Ill Child Care Leave: up to 37 weeks of unpaid, job- protected leave to provide care to a critically ill child. Crime-Related Child Death or Disappearance Leave: up to 52 weeks of unpaid, job-protected leave for parents of a missing child and up to 104 weeks of unpaid, job-protected leave for parents of a child who has died as a result of a crime. 70

71. Manitoba Termination Chart* Length of ServiceRequired Notice/Pay by Employer 30 days to 12 months1 week 12 mos to 3 yrs2 weeks 3 yrs to 5 yrs4 weeks 5 yrs to 10 years6 weeks At least 10 years8 weeks 71 *Does not include severance or common law WB-17

72. TAXABLE OR NONTAXABLE PAGES 18 - 24 Section 3 72

73. Deductions From Pay Allowed Lawful deductions include: Statutory deductions (income tax, CPP, EI) Court ordered deductions (for example, garnishment) Those that provide a benefit to employees (for example, health plans) Charges for board and lodging as authorized by the Minimum Wage Orders Recovery of pay advances and overpayments Deductions for employee purchases from the employer's business on account, if there is a clear agreement between the employee and the employer that these can be deducted Deductions for dry cleaning of woolen or other heavy material uniforms These deductions can be made even if they bring the employee’s wages below the minimum wage. 73

74. Deductions From Pay Other Deductions: Some employers make deductions from employees' pay for losses, shortages, damage, etc. Also some employers may make deductions for employee debts that are not for purchases on account. These deductions: must not take the employee's gross pay below minimum wage must be authorized by a clear agreement between the employer and the employee. Deductions are authorized by the employee when there is a written agreement or when the employee has acted in a way that shows that s/he accepts the deduction 74

75. Written Authorization for Deductions we recommend that employers use written authorizations for all such deductions if the deduction is for losses incurred while the employee is working, it must be supported by a written authorization by the employee. The authorization should be made in advance, ideally when the employee is hired. Authorizations made after the loss occurs will be open to challenge. The authorization should specify the kind and amount of deductions that will be made. It should be dated and signed by the employee if the deduction is for losses caused by customers leaving the employer's business without paying for the purchase of goods or services, the employer must be able to show that the loss is the fault of the employee 75

76. Deductions From Wages Only under certain circumstances may an employer make deductions from an employee’s wages. Deductions from wages are not allowed for a cash shortage, or lost or stolen property if a person other than the employee had control over or access to the cash or property. For example, an employer cannot deduct wages from an employee working at a gas station because someone leaves without paying the bill after pumping gas for their car. Check our resources below for a complete explanation. 76

77. Withholdings Priority 1.Government regulated withholdings: Employment Insurance (EI) Canada Pension Plan (CPP) Quėbec Pension Plan (QPP) Federal and Provincial Income Taxes 2.Involuntaries Garnishments Maintenance Orders for Support 3.Voluntaries Health insurance, life insurance, L-T-Disability, etc. 77 WB – 18

78. Service Canada Website www.servicecanada.gc.ca Use it to file ROE (Record of Employment) Report on Hirings The Report on Hirings (ROH) program is a voluntary verification program that allows employers to submit the Social Insurance Number and the first day worked for newly hired or recalled employees to Service Canada each month using a secure online application. You will benefit from ROH if you: have a high turnover in staff; do a lot of hiring over the course of an average year; and complete several Records of Employment (ROEs) over the course of an average year. 78 WB – 19

79. What’s New For Payroll Employers can now request to transfer a misallocated credit within a payroll program account or from a payroll program account to another program account. They can also request a payment search for a payment that has been made but has not been credited to the account. For more information, go to My Business Account on CRA website. My Business Account New income code for the T4 slip Code 88, Indian (exempt income) – Self-employment, is a new income code that was created for the Other information area of the T4 slip. Use this new code to report tax ‑ exempt self ‑ employment income paid to an Indian who is a fisher, barber or hairdresser, taxi driver or driver of other passenger carrying vehicles.Other information 79

80. What’s New For Payroll New income codes for the T4A slip New income codes have been created for the Other information area of the T4A slip:Other information Code 136, Federal Income Support for Parents of Murdered or Missing Children grant (PMMC); Code 162, Pre-1990 past service contributions while not a contributor; Code 194, Pooled registered pension plan (PRPP) annuity payments from taxable income; Code 195, Indian (exempt income) – PRPP payments. 80

81. What’s New for Payroll Mandatory electronic filing As of January 1, 2016, if you file more than 50 information returns for a calendar year and you do not file the returns by Internet file transfer or Web Forms, you may have to pay a penalty. For more information see Penalty for failure to file information returns over the Internet.Penalty for failure to file information returns over the Internet Guides for T4032, T4008 and T4127 for 2016 are available online at www.cra.gc.cawww.cra.gc.ca 81

82. CPP Regulations – Older Workers Overview of the changes All workers aged 60 to 65 have to make CPP contributions— even if they are receiving a CPP or Quebec Pension Plan (QPP) retirement pension. Workers who are 65 to 70 years of age and who are receiving a CPP or QPP retirement pension have to contribute unless they have taken action to stop their CPP contributions. By continuing to contribute (which can be done up to and including the month they reach 70 years of age), they will receive more benefits by way of the new post-retirement benefit (PRB). For more information on the PRB and other changes to CPP benefits, go to www.servicecanada.gc.ca/cpp.www.servicecanada.gc.ca/cpp. 82

83. CPP Regulations (Continued) To stop contributing to the CPP, workers have to be at least 65 years of age and receiving a CPP or QPP retirement pension. They must do the following: Employees (who may also have self-employment income) have to complete Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election, send the original form to the Canada Revenue Agency (CRA), and give a copy to their employer. The change will take effect on the first day of the month after the employee gives the form to their employer.Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election Self-employed workers must complete Schedule 8, CPP Contributions on Self-Employment and Other Earnings, when they file their income tax and benefit return. The change will be effective on the first day of the month referenced in Schedule 8Schedule 8, CPP Contributions on Self-Employment and Other Earnings 83

84. CPP and EI Rates - 2016 CPP or EIMaximum annual earnings Basic exemption amt Maximum contributory earnings EE and ER %Maximum annual EE and ER contribution Maximum annual self- employed contribution CPP$54,900$3,500$51,4004.95%$2,544.30$5088.60 EI$50,800 EE-Premium rate 1.88% ER – your share x1.4* *rate can be different under certain circumstances EE - $955.04 ER - $1337.06 84

85. Gifts Tangible Property or Gift Card or Cash A gift has to be for a special occasion such as Christmas gift, birth of a child, marriage, employee birthday, etc. An employee can receive unlimited number of tangible property gifts (non-cash) with a value up to $500 on a nontaxable basis. Anything over $500 cumulative for the year will be taxable. Example: Employee receives $650 in tangible property gifts. $150 is taxable. Cash - taxable Near-cash - special rules apply 85 WB-21

86. Awards vs. Reward Award - Must be given for an employment- related accomplishment to be nontaxable – Outstanding service, employees’ suggestions, or meeting or exceeding safety standards. – It must be recognition of an employee’s overall contribution to the workplace –not recognition of job performance. Reward – given to employee for performance-related reasons - taxable 86 WB – 21-22

87. Awards Must be employment-related accomplishment. Long-service award rules: Value up to $500 – tangible property only - non- taxable Must be for a minimum of five years of service Must be at least 5 years since you gave the employee the last long-service or anniversary award Is not included in other gift or award benefits 87

88. Rules for Gift Cards for Gifts and Awards Example 1: You give your employee a $100 gift card or gift certificate to a department store. The employee can use this to choose whatever merchandise or service the store offers. Gift is taxable benefit because there is an element of choice. Example 2: You give employee tickets to an event on a specific date and time. Gift is non-taxable because there is no element of choice. 88

89. Prize Draws and Social Committees Taxable: Item given to one employee by an employer via a prize draw Item paid for by the employer and given via a draw to an employee of a high-performing team Nontaxable (Unless otherwise specified) Item paid for by a social committee and given via a draw Committee must be entirely funded by the employee If funded by employer – taxable If funded by both – employer percentage is taxable – employee percentage is nontaxable. 89 WB – 22

90. Type of RemunerationTaxableNon-Taxable Gift Tangible Property Gift Card Cash Over $500 per year If there is an element of choice yes Up to $500 per year There is no element of choice Award (Exception) Length of service tangible property - 5 year increments Same as above Up to $500 – separate from all other awards and gifts Reward Tangible Property Gift Card Cash yes Prize Drawings From employerYes From social committee funded by employees Funded by employer Funded by both No Yes Based on percent 90

91. Automobile Allowance Personal use of company vehicle is taxable. Use “stand-by charge” method calculation (available on CRA website: www.cra.gc.ca/autobenefits- calculator) pub. T4130.www.cra.gc.ca/autobenefits- calculator Reasonable per-kilometre allowance - nontaxable 54₵ per kilometre for the first 5,000 kilometres driven and 48₵ per kilometres driven after that. Each province sets their own governmental rate. Flat rate allowance - taxable 91 WB – 23

92. Cellular Phone Service Personal use of company cell phone is taxable Employer has responsibility to determine FMV (fair market value) of personal use. Must justify calculations Exception to the rule (all must apply): The plan’s cost is reasonable The plan is a basic plan with a fixed cost Your employee’s personal use of the service does not result in charges that are ore than the basic plan cost. 92

93. Meal Allowances/Reimbursements – Business Travel Only Detailed method Price on receipts Simplified method $17 per meal; not to exceed $51 per day Documentary evidence required 93

94. Overtime Meals Overtime meals or allowances The allowance or cost of the meal must be reasonable. Reasonable is up to $17. For overtime purposes – must be for two or more hours of overtime right before or after scheduled hours of work Overtime must occur no more than 3 times a week 94

95. Internet Service When employer provides internet service for employee for home use – the fair market value of the service for business use must be calculated. Employee should be taxed on FMV of personal use. 95

96. Education Benefits Allowances for children – taxable (some exceptions apply) Scholarships, busaries, tuition and training Employment-related training – for benefit of employer – not taxable Personal interest training – taxable Family member – post-secondary education – reported on T4A slip for the family member 96

97. Uniforms Non-taxable if the following conditions apply: You supply your employee with a distinctive uniform he or she has to wear while carrying out the employment duties. You provide your employee with special clothing designed to protect them from hazards associated with the employment. Reimbursements with receipts for uniforms and safety gear is nontaxable. 97

98. Parking Employer-provided parking is usually a taxable benefit for an employee, whether or not the employer owns the lot. Exceptions to the rule: The parking does not have a FMV There are significantly fewer spaces than there are employees who want parking and the spaces are available on a first-come, first-served basis There is no taxable benefit if you provide parking to your employee for business purposes and your employee regularly has to use his or her own automobile to do his or her duties. 98

99. Professional Membership Dues If you pay professional membership dues for your employee and you are the primary beneficiary of the payment, there is no taxable benefit for the employee 99

100. Recreational Facilities and Club Dues The use of a recreational facility or club is a taxable benefit if: You pay, reimburse or subsidize the cost of Membership to recreational facility Membership to a business or professional club Non-taxable benefit includes: You provide an in-house recreational facility You pay for a company membership at a facility and the employees are allowed to use company membership 100

101. Income Maintenance Plans (Wage Loss Plans) Non-group plan(offered to individual employees) Premium or contribution is taxable if the plan is: A sickness or accident insurance plan A disability insurance plan; or An income maintenance insurance plan Group plan (offered to group of employees) Premium or contribution is taxable if the plan is: A group sickness or accident insurance plan Employee-pay-all plan Group disability benefit – insolvent insurer (top up disability payment) 101

102. Airline Bonus Points Your employees may collect loyalty points, such as frequent flyer points or air miles, on their personal credit cards when travelling on business trips, even though you reimburse them for the amounts they spend. Usually, these points can be exchanged or cashed in for rewards (goods or services, including gift cards and certificates). 102

103. Airline Points Continued Your employees do not have to include in their income the value of the rewards they received or enjoyed from the points they collect on these business trips, unless any of the following applies: The points are converted to cash. The plan or arrangement between you and the employee seems to be a form of additional remuneration. The plan or arrangement is a form of tax avoidance. If any of the conditions above are met, the employee has to declare the fair market value of any personal rewards he or she received on an income tax and benefit return. 103

104. Airline Points Continued Exception to the rule: If you control the points (such as when an employee uses a company credit card, you have to report on their T4 slip the fair market value of any personal rewards he or she received from redeeming the points. You have to include any GST/HST that applies in the value of this benefit. 104

105. Example 1 Personal credit card - Taxable benefit Pauline's employer allows her to use her personal credit cards whenever possible to pay for business expenses, which the employer then reimburses to her. To maximize the points earned, Pauline used her personal credit cards to pay for various employer business costs, including travel expenses of other employees. CRA views this arrangement as a form of additional remuneration provided to Pauline. Pauline would not normally pay for employer business costs other than her own work-related expenses, incurred in the normal course of working. She would not normally cover the cost of business expenses of other employees. Pauline will have to calculate the fair market value of any personal reward she receives when she redeems the points. She will then have to declare the value as income on her income tax and benefit return. 105

106. Example 2 Company credit card points for benefit of the employee Jennifer's employer has a company credit card, under which loyalty points are earned. Jennifer uses the card for employment-related purchases. The employer is billed, pays the credit card charges, and receives the loyalty point statement. The employer allows Jennifer to redeem the points for personal rewards. In this case, the fair market value of the goods or services received by Jennifer is a taxable employment benefit, as her employer controls the tracking and disbursement of the points. The employer has to report the value of the goods or services on her T4 slip in the year that the points are redeemed. Alternately, if the employer did not control the tracking and redemption of the points, the value of any points redeemed by Jennifer for personal rewards would not have to be included on her T4 slip. Jennifer may have to declare the income on her income tax and benefit return. 106

107. Example 3 Personal loyalty points card - Non-taxable Frank has a personal credit card he uses for both personal and work-related expenses. The card offers loyalty points which can be cashed in for travel rewards, but which cannot be redeemed for cash. Frank decides to redeem some of the points to take his family on vacation. Since Frank controls the points, and this arrangement does not seem to be a form of additional remuneration, he does not have to include the value of the points earned from work- related expenses as income on his income tax and benefit return. 107

108. Group Term Life Insurance Policies – Employer Paid Premiums Calculating the benefit: If the premiums are paid regularly and the premium rate for each individual does not depend on age or gender, the benefit is: The premiums payable for term insurance on the individual’s life - plus The total of all sales taxes and excise tax that apply – minus The premiums and any taxes the employee paid directly or through reimbursements to the employer If taxable it is pensionable but not insurable 108

109. Private Insurance Premiums Premiums under Private Health Services Plans Where an employer makes a contribution to a private health services plan in respect of an employee, no taxable benefit arises to the employee. Benefits provided to an employee under a private health services plan are not subject to tax in the employee's hands. "Private health services plan" is defined in subsection 248(1). (See also the current version of IT-339, "Meaning of Private Health Services Plan" and IT-85, "Health and Welfare Trusts for Employees".) 109

110. Private Insurance Premiums Employer's Contribution under Provincial Hospitalization and Medical Care Insurance Plans Where an employer is required, under a provincial hospital insurance plan, a provincial medical care insurance plan, or both, to pay amounts to the provincial authority administering such plan or plans (other than with respect to the contributions or premiums that an employee is required to make under the plan), the payment of such amounts does not give rise to a taxable benefit to employees. 110

111. When Are the Premiums Taxable? Premiums under Provincial Hospitalization and Medical Care Insurance Plans Where an employer pays all or a part of the premiums or contributions that an employee is otherwise required to pay to a provincial authority administering a provincial hospital insurance plan, a provincial medical care insurance plan, or both, the amount paid is a taxable benefit to the employee. Where an employer pays an amount to an employee in respect of the employee's premium under a provincial hospital or provincial medical care insurance plan, the amount paid is a taxable benefit to the employee. 111

112. Health Spending Arrangements/Accounts (HSA) Non Taxable as long as Expenses are covered as outlined in IT-519 Taxable If used for expenses not allowed in IT-519 112

113. RRSP (Registered Retirement Savings Plans) Contributions the employer makes to an employee’s RRSP is a taxable benefit. Administrative fees you pay are considered taxable and pensionable. Do not deduct EI 113

114. Withholding Remitting What type of remitter are you? Regular remitter Quarterly remitter Accelerated remitter Remitting guidelines are based on amounts of withholdings to be remitted. 114 WB – 24-25

115. Penalties Incurred Through PIER Penalties and Interest Based on lateness of remittance Failure to remit Interest can be charged on unpaid penalties in addition to amounts owed Interest in compounded daily from date remittance was first due or penalty was first assessed. 115 WB – 26

116. GARNISHEES IN CANADA PAGE 27 Section 4 116

117. Withholdings: Garnishees Types of Garnishees Creditors Tax garnishees from CRA (Canada Revenue Agency) Child Support/Maintenance Orders 117 WB – 27, Appendix 43-44

118. Creditor Garnishees Court ordered Cannot terminate the employee for one garnishee Fine: $1,000 or face imprisonment with a duration of one year. Deduction controlled by federal and provincial laws 118

119. Tax Garnishees from CRA Allowed without a court order No limit Usually last resort 119

120. Child Support/Maintenance Orders Court may order be paid in periodic payments, lump sum or both Limits are governed by federal and provincial law Cannot terminate an employee for garnishee 120

121. Employer Liability If you receive a Requirement to Pay notice and you do not comply with the requirements: YOUR COMPANY MAY BE HELD RESPONSIBLE FOR THE AMOUNTS YOU DIDN’T REMIT! 121

122. SPECIAL CONSIDERATIONS PAGES 28-30 Section 5 122

123. Special Payroll Concerns Final Pay Calculate the employee’s earnings and deductions for year to date Give employee T4 slip File government copy by the last day of February of the following year Complete the Record of Employment (ROE) 123 WB – 28