INDIANA
AMERICAN PAYROLL ASSOCIATION
CANADIAN PAYROLL
THURSDAY SEPTEMBER 17, 2015
10:00 AM TO 11:00 AM
Presented By:
Nina Scott CPP
Executive Alliance
ABOUT EXECUTIVE ALLIANCE
Founded in 1992, Executive Alliance is the longest, continuously operating independent provider of Payroll
and Human Capital Management (HCM) consulting services in the country
We are a multi-disciplinary management consulting firm with significant experience in all aspects of HCM
systems, processes and people. We have managed many global HR and Payroll projects
Commitment & Focus
Expertise
• Independent and have no proprietary relationship
with any solution provider
• Years of experience with all major software and
service providers
• Ability to provide our clients complete and unbiased
guidance, from product evaluation through
implementation, and ongoing operations
• Assist organizations looking to improve their Payroll
and HCM processes and the use of technologies that
support these processes
• Areas of focus
• Strategic operational assessment & planning
• Vendor selection
• Implementation and project management
 Process design and improvement
 Technology optimization
• Interim management services
 HR strategic planning for systems and service
delivery
 In depth knowledge of vendors/service
providers in the HR/Payroll marketplace
 Development of business requirements and
management of full life-cycle sourcing process
 Decision making support tailored to client
business objectives: presentation of options,
associated metrics
 Experience in all HR functional areas: recruiting,
performance, compensation, benefits, payroll,
talent, learning, compliance, employee
relations, HRIS
Executive
Assist clients
with change
impacts ofconsulting
new
Alliance
has provided
technology
solutions
andBoston
service delivery
services
to 42%
of The
Globe Top 100
models
Places to Work Award Recipients
(Nov. 2009, employers with over 1,000 employees)
2
EXPERIENCE PROCESSING/IMPLEMENTING PAYROLL
Processed and/or implemented payroll in 6 of the 7 continents
Processed or implemented a payroll
3
Canadian Payroll
Employees Expectations:
1. Timely & accurate payment
2. Confidentiality of personal information
https://www.youtube.com/watch?v=kRPGPAnPNa8
Canada & US Payroll are very similar….
Things the United States doesn’t have….
Stars Who Hail from Canada
Beaver for a
National Animal
Currency that Looks
Like Monopoly
Money
A Prime Minister
AND
A Queen
Culinary
Specialties
Metric System
5
Employee & Employer Relationship
Factors consider in Employee & Employer relationship
Factor
Control: When, where, how work performed
Tools & Equipment: Who furnishes tools
Subcontracting Work: Hiring or firing
Financial Risk: No liability for operating
expenses
Responsibility for Investment: No capital
investment in business
Opportunity for Profit: No profit or loss
Exclusivity: Only work for one employer
Contract in Place: Contract governs
relationship
Payment Terms: Salary
Performs Services Under Business Name
6
SOCIAL INSURANCE NUMBER
A company must collect a SIN and TD1 from all new hires
First digit of a SIN indicates province of registration
1: Atlantic: New Brunswick, Newfoundland, Nova Scotia,
Prince Edward Island
2 & 3: Quebec
4 & 5: Ontario
6: Prairies: Alberta, Manitoba, Saskatchewan, Northwest
Territories, Nunavut
7: British Columbia, Yukon
8 & 0: Not Used
9: Work Permit
Pop: 37
Pop: 44
Pop: 4,631
Pop: 37
Largest Country in Americas
Population: 35.54M
Pop: 4,122
Pop: 527
Pop: 1,125
Approximate Population of CA: 12% of US population
Indiana: 6.6 M
Pop: 1,282
Pop: 8,215
Pop: 146
Pop: 13,679
Pop: 754
Pop: 943
Company must have a register business
number to pay taxes
SOURCE: Statistics Canada: 2014
Populations in thousands
7
SOCIAL INSURANCE NUMBER VERIFICATION
Employer must ask to see the SIN verification from every employee
Record of Employment requires the name and SIN to match exactly the SIN card/letter (no nicknames)
Social Insurance Number Digits (193456787)
1. SIN to verify
1
2. Extract the digit in the first 4
odd numbered positions –
add across
1
9
3
4
3
5
6
5
7
8
7
7
16
3. Extract the digit in each even
number position
9
4
6
8
4. Double the extracted digits
18
8
12
16
5. Add each of the digits in the
above step (considering a 2
digit number separately)
1+8
8
1+2
1+6
27
6. Add the sums
43
7. Round to the nearest number
ending in 0
50
8. Subtract Step 7 minus Step 6
7
9. Valid if last digit in SIN equals
step 8
7
8
SOCIAL INSURANCE NUMBER VERIFICATION (ANOTHER ONE)
Effective 3/31/14 Service Canada will not longer issue SIN cards
All numbers will be issued via paper format
Social Insurance Number Digits (193456787)
1. SIN to verify
1
9
3
4
5
6
7
8
7
2. Fixed number
1
2
1
2
1
2
1
2
1
3. Multiple step 1 * 2
1
18
3
8
5
12
7
16
7
4. Add each of the digits in the
above step (considering a 2
digit number separately)
1
1+8
3
8
5
1+2
7
1+6
7
5. The SIN is valid if step 4 is
divisible by 10 evenly
50
5
Website to see if validate SIN:
http://www.runnersweb.com/running/sin_check.html
9
WITHHOLDING ELECTION FORMS
Employees are responsible for completing TD1 (federal and provincial)/TP-1015.3V form upon hire or
7 days from the change in personal situation
Federal: TD1
Quebec: TP-1015.3V
In addition to
completing the
federal TD1:
Employees who
claim more than
the basic
personal
amount have to
complete to the
TD1 that
corresponds to
their province
or territory of
employment
TD1X/TP-1015.R.13.1-V: Commission employees who incur business expenses
10
MINIMUM WAGE
Conversion Rate: 0.76 USD
Jurisdiction
Federal
Prevailing provincial wage
Alberta
$10.20 ($11.20 - October 1, 2015); $9.20 Liquor Servers
British Columbia
$10.25 ($10.45 – September 15, 2015)
$9.00 Liquor Servers ($9.20 – September 15, 2015)
Manitoba
$10.70 ($11.00 - October 1, 2015)
New Brunswick
$10.30
Newfoundland & Labrador
$10.25 ($10.50 - October 1, 2015)
Northwest Territories
$12.50
Nunavut
$11.00
Nova Scotia
$10.60
Ontario
$11.00 General Workers ($11.25 – October 1, 2015)
$9.55 Liquor Servers ($9.80 – October 1, 2015)
$10.30 Student Under 18 (less than 28 HRs/wk) ($10.55 – October 1, 2015)
Prince Edward Island
$10.50
Quebec
$10.55; $9.05 If Gratuities Apply
Saskatchewan
$10.20 ($10.50 - October 1, 2015)
Yukon
$10.86
11
OVERTIME REQUIREMENTS BY JURISDICTION
Jurisdiction
Daily OT
Weekly
Rate
Federal
8 hrs
40 hrs
1.5 x reg rate
Yes
Alberta
8 hrs
44 hrs
1.5 x reg rate
Yes: 1 OT = 1 Time Off
British Columbia
8 hrs
12hrs
40 hrs
1.5 x reg rate
2.0 x reg rate
Yes: 1 OT = 1.5 Time Off
Manitoba
8 hrs
40 hrs
1.5 x reg rate
Yes: 1 OT = 1.5 Time Off
New Brunswick
-
44 hrs
1.5 x reg rate
-
Newfoundland & Labrador
-
40 hrs
1.5 x reg rate
Yes: 1 OT = 1.5 Time Off
8 hrs
40 hrs
1.5 x reg rate
Yes
Nunavut
-
40 hrs
1.5 x reg rate
Yes
Nova Scotia
-
48 hrs
1.5 x reg rate
-
Ontario
-
44 hrs
1.5 x reg rate
Yes: 1 OT = 1.5 Time Off
Prince Edward Island
-
48 hrs
1.5 x reg rate
Yes: 1 OT = 1.5 Time Off
Quebec
-
40 hrs
1.5 x reg rate
Yes: 1 OT = 1.5 Time Off
Saskatchewan
8 hrs
40 hrs
1.5 x reg rate
Yes: 1 OT = 1.5 Time Off
Yukon
8 hrs
40 hrs
1.5 x reg rate
Yes: 1 OT = 1.5 Time Off
Northwest Territories
Banking
Banking: Allows employee to defer the payment or the taking of equivalent time off at later date within
regulated period with signed agreement – not mandatory to offer
12
HOLIDAYS
Days
Wkly Std
Hours
Decrease
Holiday in OT
Rate Pay for
Work on
Holiday
Federal
6
Yes
No
1.5x
Alberta
9
No
No
1.5x
British Columbia
10
No
Yes: Worked
1.5x/2x
8+1
No
Yes: Not
Worked
1.5x
New Brunswick
7
No
No
1.5x
Newfoundland & Labrador
6
No
No
2.0x
Northwest Territories
10
Yes
No
1.5x
Nunavut
10
Yes
No
1.5x
Nova Scotia
6
No
Yes: Worked
1.5x
Ontario
9
No
No
1.5x
Prince Edward Island
7
No
No
1.5x
8
No
Yes: Not
Worked
1.0x
Saskatchewan
10
Yes
No
1.5x
Yukon
9
Yes
No
1.5x
Jurisdiction
Manitoba
Quebec
Statutory Holidays:
• New Years Day
• Canada/Memorial Day
• Labour Day
• Christmas Day
• Remembrance Day
• Good Friday
Provincial Holidays:
• Jan 2
• Family Day
• Islander Day
• Easter Monday
• National Aboriginal Day
• Fete National
• First Monday in Aug
• Discovery Day
• Thanksgiving
• Victoria Day
• Boxing Day
Each province has regulations on:
• Entitled to holiday
• Not qualified and works
• Holiday not on a normal work
day and does not work
• Qualified and does not work
• Qualified, works, wants another
day off
13
VACATION TIME
Jurisdiction
Length Annual
Federal
2 wks; 3 wks after 6 yrs
Alberta
2 wks; 3 wks after 5 yrs
British Columbia
2 wks; 3 wks after 5 yrs
Manitoba
2 wks; 3 wks after 5 yrs
New Brunswick
2 wks; 3 wks after 8 yrs
Newfoundland & Labrador
2 wks; 3 wks after 15 yrs
Northwest Territories
2 wks; 3 wks after 5 yrs
Nunavut
2 wks; 3 wks after 5 yrs
Nova Scotia
2 wks; 3 wks after 8 yrs
Ontario
2 wks after 12 mths
Prince Edward Island
2 wks after 12 mths; 3 wks
after 8 yrs
Quebec
2 wks; 3 wks after 5 yrs
Saskatchewan
3 wks; 4 wks after 10 yrs
Yukon
2 wks after 12 mths
• Many jurisdictions legislate employees take
time in 1 or 2 week increments
• Vacation earnings 4% (2 weeks)/6% (3
weeks) of vacationable earnings must be
paid when vacation taken or before.
Includes (in most jurisdictions):
•
•
•
•
•
•
•
•
•
Regular wages/salary
Overtime pay
Bonuses
Pay in lieu of notice
Holiday
Sick
Previously paid vacation
Director’s fees
Board and lodging taxable benefit
• Employees must take time within a period
ranging from 4 to 12 months after earned
• Notice must be given to the employer 24
hours to 4 weeks in advance
• Each jurisdiction has regulations if used and
accrued vacation time must show on
remuneration statement
14
LEAVES
Qualifying periods, length of leave and qualifications are legislated by
each province/territory
Jurisdiction
Leaves offered in all provinces/territories:
• Maternity (pregnancy): range 17 to 18 weeks
• Parental/adoption/child care: range 35 to 52 weeks
• Paternal: 5 days (Quebec)
Federal
6 mths
Alberta
52 wks
British Columbia
Manitoba
Other leave types (vary by jurisdiction):
• Bereavement
• Jury duty
• Leaves for family situations
• Citizenship leave
• Compassionate care leave
• Sick
• Voting
• Wedding
• Reservists
• Organ donor leave
Qualifying Period
New Brunswick
7 mths
-
Newfoundland &
Labrador
20 wks
Northwest Territories
12 mths
Nunavut
12 mths
Nova Scotia
12 mths
Ontario
Prince Edward Island
Quebec
13 wks prior to delivery
20 wks
-
Saskatchewan
20 wks
Yukon
12 mths
15
TERMINATIONS/WORKERS’ COMPENSATION
Involuntary Terminations:
• Notice:
 2 weeks or in lieu pay
 50+ employees: at least 16 weeks
• Must complete Record of Employment for each employee
• Severance:
 Must complete 12 consecutive month of
employment with the employer
 Two regular working days for each completed year
of employment
 Minimum 5 days
 Dismiss for cause are not eligible
• Accrued vacation must be paid out
• “Retiring allowances” are paid at the discretion of the
employer
Workers’ Compensation:
• Provincial/territorial difference exist
• Workers who become sick or injured due to their
employment are entitled
• Administered at the provincial/territorial level
• Premium rates based on occupational grouping
• Employers are obligated to notify provincial workers
compensation office when employees become injured
and must submit an injury report
• Must complete Record of Employment for each
employee
• Maximum insurable income varies by jurisdiction
16
RECORD OF EMPLOYMENT
• Employers provide work history
(hours/earnings) for employees receiving
insurable earnings who stop working and
experience an interruption of earnings
• Information provided helps determine
Employment Insurance benefits
• Two ROE forms available: paper/electronic
(web/SAT)
• Insurable earnings: Earnings provided to
employees in which EI premiums are paid
• Interruption of earnings:
• Seven consecutive calendar days with
no work and no insurable earnings
• Employee’s salary falls below 60% if
regular weekly earnings
• Deadline for issuing ROE:
• Paper: 5 calendar days following the
interruption of earnings
• Electronic: 5 calendar days after the
end of the pay period
• Paper ROEs have serial numbers that should
be tracked similar to check stock
• 3 part form: 1) employee, 2) Service
Canada, 3) employer retained
17
State
Work
Comp
Dept of
Labor
Social Internal
Security Revenue
Admin Service
CANADIAN GOVERNMENT AGENCIES
Canada Revenue
Agency (CRA)
Service Canada
• URL: http://www.cra-arc.gc.ca/
• Administers: Income Tax Act (ITA), Goods and Services Tax
(GST), Harmonized Sales Tax (HST)
• Collects: Income Tax (ITA), Canada Pension Plan (CPP),
Employment Insurance (EI), Provincial Income Tax
• URL: http://www.servicecanada.gc.ca/
• Administers: Canada Pension Plan (CPP),
Employment Insurance (EI)
• Collects: None
• URL: http://www.statcan.gc.ca/
Statistics Canada
• Administers Labor statistics
• Collects: Wage and headcount information
Workers’ Comp
Board
Provincial Income &
Medical Authorities
• URL Listing Provincial WCB: https://www.ccohs.ca/oshanswers
/information/wcb_canada.html
• Administers: Wage loss benefits and rehabilitation of injured or
disabled workers (by province/territory)
• Collects: Workers Comp Board Assessments
• Funded: Employer
• URL: http://www.
revenuquebec.ca/en/
• Administers: Quebec
Taxation Act
Revenue
Quebec
• Collects: Quebec
Provincial income tax,
Quebec Pension Plan
(QPP), Quebec
Parental Insurance
Plan (QPIP), Quebec
Heath Services Fund
(QHSF), Training Tax,
Commission de
normes du travail,
Commission de la
sante et de la security
du travail
•Administers: Provincial health care
18
PAYROLL TAXES: PAY AS YOU GO
Employee
Income Tax (ITA)
Employees pay both federal and
provincial income tax (including
Quebec)
Employment Insurance (EI)
Temporary financial support to
unemployed (including maternity
excluding Quebec)
Canada/Quebec Pension Plan
(CPP/QPP)
Retirement pensions, survivor,
disability and death benefits
Quebec Parental Insurance Plan
(QPIP)
Subject to tax on worldwide income
4 divisions of taxes: 15 to 29%
Special tax considerations for:
•
•
•
•
•
Bonus
Stock
Retroactive
Lump sum/commissions
Termination pay
Employer
* Some payroll providers
consolidate with provincial
Non Quebec:
Annual Max: $49.5K
Rate: 1.88%
Quebec:
Annual Max: $49.5K
Rate: 1.54%
Non Quebec:
Annual Max: $49.5K
Rate: 2.632%
Quebec:
Annual Max: $49.5K
Rate: 2.156%
Non Quebec: 18 to 70 years
Annual Contribution Max: $50.1K
Rate: 4.95%
Quebec: 18+ years
Annual Contribution Max: $50.1K
Rate: 5.25%
Non Quebec: 18 to 70 years
Annual Contribution Max: $50.1K
Rate: 4.95%
Quebec: 18+ years
Annual Contribution Max: $50.1K
Rate: 5.25%
Quebec:
Annual Max: $70K
Rate: 0.559%
Quebec:
Annual Max: $70K
Rate: 0.782%
CRA Remittances:
PD7A Series
• Quarterly
• Monthly
• Semi-monthly
• 3 business
days
Revenue Quebec
Remittances:
• Annual
• Quarterly
• Monthly
• Semi-monthly
• 3 business
days
Maternity, parental, and
adoption benefits
Provincial Income Tax & Employer Payroll Taxes
19
INCOME TAX CALCULATION
Income Tax Calculation
+ Salaries, wages, commissions
+ Bonuses, vacation pay, gratuities
Calculation methods:
1.Table
2.Manual
3.Formula
4.Payroll Online calculator
+ Pensions, retiring allowances, death benefits
+ Value of taxable benefits
- EE contribution to registered pension plan
- RRSP contributions
- Federal union dues
- Deduction for living in prescribed zone
Annual Net Taxable
Income
Rate
Constant
$0-44,701
15%
$0
$44,701-89,401
22%
$3,129
$89,401-138,586
26%
$6,705
$138,586+
29%
$10,863
- Deductions authorized by the CRA/Rev Quebec
= Net taxable income
Federal Tax Credits
x Pay period frequency (annualize)
Basic Person & Spouse (each)
$11,327
x Annual tax rate
Infirm Dependent 18+
$6,700
- Constant (considers lower tax brackets)
Eligible Pension Income
$2,000
- Federal tax credits
Age 65
$7,033
= Annual tax amount
Disability
$7,899
Divide by number of pay periods
Caregiver
$4,608
= Pay Period Tax
Education (FT)
$465/mth
Education (PT)
$140/mth
20
TAXABLE FRINGE BENEFITS
All fringe benefits are included in income unless specifically excluded
FMV less employee contribution
Differences between United States and Canada:
• Parking: Taxable unless FMV of the parking cannot be determined (i.e. public
parking)
• Group Term Life, AD&D and Dependent Life: Full value of the premium
including all sales tax and excise tax
• Gift & Awards: Exempts non-cash gifts (cash/near cash always taxable) for
special occasions (i.e. religious holiday, birthday, wedding) and awards for
employment related accomplishments are considered de minimis up to $500
maximum annually. Service awards every 5 years up to $500 are non taxable
• Overtime Meals: Very specific, excluded from income reasonable costs
(generally <$17) for overtime greater than 2 hours before/after regularly
schedule shift
• Relocation: Exemptions for all relocation expenses related to the
transportation of household goods, employee travel and lodging expenses in
moving from the old residence, meals, temporary living, house hunting
expenses and selling expenses
• Personal Use of Company Vehicle: Very different formula for calculating
value(refer to www.cra.arc.gc.ca)
Complete List: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/menu-eng.html
Provincial tax treatments may be different
21
TAXATION: EMPLOYEE SHARE PLANS
Definition:
•
Stock Purchase Plan: ownership allows the purchase of stock at a discount,
generally 10 to 15%
Taxable Event
Exercise Price
Grant Price
Option to 100 shares
Grant Price: $80
Paid for by payroll
deductions
Exercise Price: $100
Taxable Event
$8,000
$10,000
$2,000
Taxation:
•
•
•
Discount is taxable at exercise
If stock held by employee AND stock gains value, each calendar year, the employee self
reports, the capital gains rate (difference between the already taxed discount and the gain
in value the stock made)
A deduction equal to one half of difference between price of shares exercised and sale
gain is permitted in income at marginal rate
**RSU taxation similar to US at vest for FMV
22
PROVINCIAL TAXES
Income Tax
Provincial taxes include
income, health, education
and training taxes
Income Tax
• Resident
• Progressive: 5.9-14.05%
Payroll Tax
• Employer
• 2%
Income Tax
Income Tax
• Resident
• Progressive: 4-11.5%
Payroll Tax
• Employer
• 2%
• Resident
• Progressive: 7.04-12.76%
• Resident
• Progressive: 16-25.75%
Employer Paid
• Health Services: 2.7-4.26% of
worldwide payroll
• Labour Standards Contribution: .08%
up $70K of pay per employee
• Workforce Skills Development &
Recognition: >$1M payroll pay 1%
Income Tax
• Resident
• Progressive: 7.7-13.3%
Income Tax
Health/Post Secondary Ed
• Resident
• Progressive: 5.06-16.8%
• Employer
• >$1.2M: 2%
Income Tax
• Resident
• Progressive: 9.8-16.7%
Income Tax
• Resident
• Flat tax: 10%
Income Tax
• Resident
• Progressive: 11-15%
Tax credits are different by province
Income Tax
• Resident
• Progressive: 8.79-21%
Income Tax
• Resident
• Progressive: 10.8-17.4%
Health/Post Secondary Ed
• Employer
• <$1.25M: 0%; $1.252.5M: 4.3%; >$2.5M:
2.15%
Income Tax
• Resident
• Progressive: 5.05-13.16%
Employer Health Tax
Income Tax
• Resident
• Progressive: 9.68-25.75%
• Employer
• Progressive: 0.98-1.95%
Home based employees who don’t report to a permanent establishment, the
province of employment would where wages and salary are paid from
23
T4: STATEMENT OF REMUNERATION PAID
• Complete T4 slips for all individuals who
received remuneration during the year if:
• There was deductable CPP/QPP
contributions, EI premiums, PPIP
premiums, or income tax from the
remuneration; or
• Remuneration was more than $500
• Report earnings in year in which paid
• Distribution of T4s should be on or before
the last day of February following the year
end earnings were paid. Number of copies:
• Mail: Two paper copies last known
address
• Person: Two paper copies
• Electronic: One copy with written
consent
• Complete a separate T4 for each
province/territory the employee worked in
• One copy of the T4 should be sent with T4
Summary to CRA
24
REFERENCES
• http://www.payworks.ca/payroll-legislation
• http://www.bna.com: Canada Primer & Canadian Payroll Association’s Canada
Payroll: A Comprehensive Overview
• http://www.cra-arc.gc.ca/
• http://service canada.gc.ca/
• http://www.statcan.gc.ca
• https://www.ccohs.ca/oshanswers /information/wcb_canada.html
• http://www.runnersweb.com/running/sin_check.html
• http://www.american payroll.org
25
QUESTIONS
Thank You
Nina Scott, CPP
Executive Alliance
ninascott@executivealliance.com
904 687-9818 (cell)
26