Question

32.True or False. If an employee leaves one employer during the year to start
work with another employer, the new employer can take into account what
the employee’s previous employer withheld in Canada Pension Plan
contributions (1)

33.The maximum insurable earning for 2019 is _______________________.(1)

34.The maximum employer premium for EI is ________________________.(1)

35.Like CPP, there is an age restriction on the withholding of an EI premium.
(T/F) (1)
36.Frank works 75 hours in the bi-weekly pay period and earns $30.00 an hour.
He also receives a $100.00 car allowance each pay. Company is providing
dental coverage and paying $50 to the insurance company. Calculate CPP
and EI. (2)

37.Maria Lopez receives a salary of $3,500.00 plus a signing bonus of
$51,000.00. Calculate CPP and EI.

pleasee

Answer 1

32. True or False. If an employee leaves one employer during the year to start
work with another employer, the new employer can take into account what
the employee’s previous employer withheld in Canada Pension Plan
contributions . FALSE

Correct - If an employee leaves one employer during the year to start work with another employer, the new employer also has to deduct CPP contributions without taking into account what the previous employer paid. This is the case even if the employee has contributed the maximum amount during the previous employment.

33. The maximum insurable earning for 2019 is $53,100.

34. The maximum employer premium for EI is $1204.31 in 2019 i.e. @ 1.4 times of 1.4 times* the amount of maximum annual employee EI premiums i.e $860.22 (1.62% of $53,100)

35. Like CPP, there is an age restriction on the withholding of an EI premium.(T/F) FALSE

There is no age limit for deducting EI premiums.

36.Frank works 75 hours in the bi-weekly pay period and earns $30.00 an hour. He also receives a $100.00 car allowance each pay. Company is providing dental coverage and paying $50 to the insurance company. Calculate CPP and EI. (2)

Solution-

basic yearly exemption = $3,500 for 2019

CALCULATION OF CPP for Current Pay Check

Step 1: Calculate the basic pay-period exemption. (Note: bi-weekly pay period results in 26 pay checks per year)

$3,500 ÷ 26 = $143.62 (do not round off)

Step 2: Calculate the total pensionable income

(75hours * $30 an hour)+ $100 + $50 = $2,250 + $150   = $2,400

Step 3: Deduct the basic pay-period exemption from the total pensionable income

$2,400 – $143.62 = $2,256.38

Step 4: Calculate the amount of CPP contributions. (CPP contribution rate is 5.10% for 2019).

$2,256.38 × 5.10% = $115.08

Step 5: Calculate the amount of total CPP contributions (Employer & Employee) per pay check

$115.08 × 2 = $230.16

CALCULATION OF EI

Step 1: Enter the employee's insurable earnings $(per pay check)

$53,100 ÷ 26 = $2,042.31

Step 2: Enter the employee's EI premium rate for the year i.e. 1.62% for 2019.

Step 3: Multiply the amount in step 1 by the rate in step 2

           = $2,042.31 * 1.62%       =$33.09

The result is the EI premiums to be deducted for Frank. And Employer EI premium payable is 1.4 times* the amount of EI premiums payable by an employee. Hence,

                        =$33.09 *1.4 = $46.326

37.Maria Lopez receives a salary of $3,500.00 plus a signing bonus of $51,000.00. Calculate CPP and EI.

Solution-

basic yearly exemption = $3,500 for 2019

CALCULATION OF CPP for current month salary

Step 1: Calculate the basic pay-period exemption. (Note: monthly pay period results in 12 pay checks per year)

$3,500 ÷ 12 = $291.67

Step 2: Calculate the total pensionable income

$3,500+ $51,000 = $54,500

Step 3: Deduct the basic pay-period exemption from the total pensionable income

$54,500 – $291.67 = $54,208.33

Step 4: Calculate the amount of CPP contributions (CPP contribution rate is 5.10% for 2019)

$54,208.33 × 5.10% = $2,764.62

The maximum employee contribution for the year 2019 is $2,748.90 but the calculated amount exceeds the limit. Hence the CPP contribution is $2,748.90.

CALCULATION OF EI

Step 1: Enter the employee's insurable earnings $(per pay check)

$53,100 ÷ 12 = $4,425

Step 2: Enter the employee's EI premium rate for the year i.e. 1.62% for 2019.

Step 3: Multiply the amount in step 1 by the rate in step 2

           = $4,425 * 1.62%       =$71.685

The result is the EI premiums to be deducted for Frank. And Employer EI premium payable is 1.4 times* the amount of EI premiums payable by an employee. Hence,

                        =$71.685 *1.4 = $100.359