National Payroll Institute Payroll Fundamentals 1Exam PF1 Question # 21 Topic 3 Discussion
PF1 Exam Topic 3 Question 21 Discussion:
Question #: 21
Topic #: 3
Bonus and incentive pays are subject to which statutory deductions?
A.
Canada/Quebec Pension Plan contributions, Employment Insurance and Quebec Parental Insurance Plan premiums, income taxes and Northwest Territories/Nunavut payroll taxes
B.
Employment Insurance and Quebec Parental Insurance Plan premiums and Northwest Territories/Nunavut payroll taxes
C.
Canada/Quebec Pension Plan contributions, Quebec Parental Insurance Plan premiums, income taxes and Northwest Territories/Nunavut payroll taxes
D.
Canada/Quebec Pension Plan contributions, Employment Insurance premiums and income taxes
Bonuses and incentives are treated as taxable remuneration, so they are generally subject to the same core statutory deductions as regular earnings: CPP/QPP, EI, and income tax (and in Quebec, QPIP also applies when the remuneration is subject to EI). The CRA specifically notes that you must deduct EI premiums from bonuses/retroactive pay (up to the annual maximum), and the CRA’s guidance for bonuses/irregular amounts uses tools (PDOC/formulas) that calculate CPP contributions, EI premiums, and income tax on these payments.
In Quebec payroll, remuneration that is subject to EI premiums is generally also subject to QPIP premiums, so bonuses/incentives that are EI-insurable are typically QPIP-insurable as well.
In the Northwest Territories and Nunavut, there is also a statutory territorial payroll tax that employers must withhold/remit where applicable, and the NWT guidance explicitly lists bonuses as part of employment income subject to payroll tax.
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