Payroll Fundamentals 1Exam PF1 Exam Questions with Experts Answers Updated Recently

Step 1 — Mara’s gross earnings / taxable earnings components

Semi-monthly salary = $54,500.00 ÷ 24 = $2,270.83

Life insurance coverage = 2 × $54,500 = $109,000

Monthly premium (excl. tax) = 109 × $0.57 = $62.13

9% insurance premium tax = $62.13 × 1.09 = $67.72

Semi-monthly taxable benefit = $67.72 ÷ 2 = $33.86

Health premium (excl. tax) = $260.00

9% insurance premium tax = $260.00 × 1.09 = $283.40

Semi-monthly taxable benefit (Quebec) = $283.40 ÷ 2 = $141.70

GTE (total taxable in Quebec) = 2,270.83 + 33.86 + 141.70 = $2,446.39

Step 2 — Pensionable earnings (PE)

For this calculation, treat salary + taxable group term life as pensionable for QPP withholding, while EI remains non-insurable for non-cash benefits.

PE = 2,270.83 + 33.86 = $2,304.69

Step 3 — Insurable earnings (IE)

IE = salary only = $2,270.83

Step 4 — Net taxable income (CRA) (NTI)

Federal taxable income uses salary plus taxable benefits used for federal withholding tables here.

NTI (CRA) = $2,304.69

Step 5 — Net taxable income (RQ) (NTI)

NTI (RQ) = $2,446.39

Step 6 — QPP contribution

Use the QPP employee rate (basic + additional) and apply the basic exemption prorated per pay period.

Basic exemption per semi-monthly period = $3,500 ÷ 24 = $145.83

Contributory earnings = PE − 145.83 = 2,304.69 − 145.83 = $2,158.86

QPP = 2,158.86 × 6.4% = $138.17

QPP = $138.17

Step 7 — EI premium

Quebec EI employee rate for 2026: 1.30%.

EI = 2,270.83 × 0.0130 = $29.52

Step 8 — QPIP premium

Use the Revenu Québec employee QPIP rate shown for 2026.

QPIP = 2,270.83 × 0.00430 = $9.76

Step 9 — Federal income tax

From the CRA Quebec federal tax deductions table (24 pay periods), at pay $2,304.69 (range 2288–2306) and claim code 3, the federal tax is:

Federal tax = $139.95

Step 10 — Quebec provincial income tax

From TP-1015.TI.24 (24 pay periods) at remuneration $2,446.39 (range 2445.00–2464.99) and deduction code C, the tax is:

Quebec tax = $214.81

Step 11 — Total deductions

QPP 138.17

EI 29.52

QPIP 9.76

Federal 139.95

Quebec 214.81

= $532.21

Total deductions = $532.21

Step 12 — Net pay

Net pay is based on cash pay (salary) minus deductions (tax still applies even when part of taxable income is a benefit).

Net pay = 2,270.83 − 532.21 = $1,738.62

First calculate Ronda’s pensionable earnings for the week. Her gross pay is:

$12.50 × 40 = $500.00.

CPP is calculated on pensionable earnings after subtracting the basic exemption (the Year’s Basic Exemption, YBE), prorated to the pay period. The CRA confirms the YBE is $3,500 and the employee CPP contribution rate for 2026 is 5.95% for base CPP.

Weekly exemption = $3,500 ÷ 52 = $67.31 (rounded to cents).

Pensionable earnings subject to CPP this week = $500.00 − $67.31 = $432.69.

CPP contribution = $432.69 × 5.95% = $432.69 × 0.0595 = $25.745…, which rounds to $25.75.

This deduction continues each pay until the employee reaches the annual CPP maximum contribution for the year (at which point CPP stops for the remainder of the year).