PF1 Dumps with Practice Exam Questions Answers

Regular earnings for an hourly employee are calculated as hourly rate × hours worked. Because “bi-weekly” means two weeks of work paid together, you calculate one week’s regular earnings and then multiply by two (assuming the hours are the same each week and there is no overtime premium indicated).

Step 1: Weekly regular earnings:

$10.10 × 37.5 hours = $10.10 × 37 + $10.10 × 0.5

= $373.70 + $5.05

= $378.75.

Step 2: Bi-weekly regular earnings (2 weeks):

$378.75 × 2 = $757.50.

So Matt’s regular bi-weekly earnings are $757.50.

In payroll documentation, “regular earnings” are the employee’s base wages before statutory deductions (CPP/QPP, EI, income tax) and before other deductions, and they exclude any separately calculated earnings like overtime premiums or taxable benefits unless stated. This approach (rate × hours, then adjust for pay period) is the standard method used to compute gross/regular pay for hourly employees before moving on to deductions and net pay.

“Net taxable income” for payroll withholding purposes is the amount of income on which income tax is calculated for the pay period. It generally starts with the employee’s gross taxable earnings for the period (regular wages plus any taxable benefits/allowances that must be included in income), then subtracts only those deductions that are deductible for tax at source (for example, certain registered pension plan contributions, union dues, etc., if applicable). A cash taxable benefit is treated like additional remuneration and is included in taxable income. (canada.ca)

Here, Anthony’s weekly taxable earnings are:

$750.00 wages + $25.00 cash taxable benefit = $775.00.

Being exempt from CPP contributions affects whether CPP is deducted, but CPP is not a “net taxable income” subtraction in this question (and in any case, no CPP is being deducted). The question also does not mention any other tax-deductible payroll deductions (like RPP contributions), so there is nothing to subtract from taxable earnings.

Therefore, Anthony’s net taxable income for the week is $775.00.

QPIP premiums are calculated on an employee’s insurable earnings in Quebec (up to the annual maximum insurable earnings). For 2026, Revenu Québec shows the employee QPIP premium rate is 0.430% (0.00430) and the maximum insurable earnings are $103,000.

Step 1: Determine Evangeline’s weekly insurable earnings (assuming all earnings are QPIP-insurable and the annual maximum will not be exceeded, as the question implies):

Regular earnings $1,075.00 + overtime $154.00 = $1,229.00.

Step 2: Apply the employee QPIP rate:

$1,229.00 × 0.430% = $1,229.00 × 0.00430 = $5.2847.

Step 3: Round to cents (standard payroll practice): $5.28.

Payroll would deduct $5.28 from Evangeline’s pay for QPIP for that week and remit it along with other source deductions as required. The deduction continues until the employee reaches the annual QPIP maximum premium (based on the annual insurable earnings limit).

Overtime premiums and piece-rate pay are forms of earnings because they are amounts paid for work performed. CRA’s payroll guidance confirms overtime pay is remuneration from which you must deduct statutory deductions (CPP, EI, and income tax), reflecting that overtime is treated as employment earnings.

Similarly, piecework (piece-rate pay) is a method of paying wages based on units produced rather than time. It is still compensation for labour and therefore part of gross earnings used to calculate payroll deductions and net pay. This is fundamentally different from:

Expense reimbursements, which repay employee-incurred business costs (not pay for work).

Allowances, which are predetermined amounts to help cover anticipated expenses without receipts.

Benefits, which are the value of goods/services provided by the employer or paid on the employee’s behalf.

So a premium paid for overtime hours or a piece-rate per unit produced is classified as earnings (option A).

An ROE is required when an employee experiences an interruption of earnings, such as 7 consecutive calendar days with no work and no insurable earnings (the “7-day rule”), or when earnings fall below 60% of regular weekly earnings for specific reasons (the “60% rule”). That means a 6-week unpaid leave (A) typically triggers an interruption of earnings, and a drop to 40% of normal earnings (B) meets the “below 60%” threshold (when due to the listed leave reasons). A layoff with no recall (D) also triggers an interruption of earnings under the 7-day rule.

However, Service Canada lists a special situation for a change in ownership: the former employer does not have to issue ROEs if (1) there is no actual break in the employee receiving earnings, and (2) payroll records are available to the new owner and the new owner agrees to issue a single ROE covering both periods if needed. That is exactly option C, so no ROE is required in that scenario.