Payroll FAQ – Part 2

 

This is the second post of our payroll FAQs. A reminder that these are general rules, for more specifics please visit the Alberta website through the links in the post. It is important to note, these are the minimum standards that must be met in Alberta. You are free to give your employees more than what is outlined below.

 

Vacation Pay

Vacation pay is something all employers are required provide for their employees and employees must use their vacation time within 12 months from when they earned it.

Employees are not eligible for vacation pay until they have been employed for a year, however an employer can allow for vacation before the year is over.

Employees earn 2 weeks of vacation for 1-5 years of employment and 3 weeks of vacation for 5 years and over. This time must be given in one unbroken period, unless the employee has requested to have it split up.

Employers can deny vacation time for operational reasons and decide when their employee takes the time. However, an employee must be given 2 weeks notice of the assigned time off.

There are some exceptions for who receives vacation pay and how it is paid. For a full list, you can check out the Alberta government website, here. The most notable exception is Construction Workers. Their employers are not required to give them vacation time, but they do need to pay 6% vacation pay on each pay cheque.

How do you pay it?

Vacation pay can either be A) Paid out on every pay cheque B) Accrued for use when actual vacation is taken. If option B is selected, the employee must receive their vacation pay no later than the first pay period after the vacation has been taken.

For the first 5 years, vacation pay is calculated as 4% of the yearly wages, after 5 years it is 6%.

When calculating vacation pay, the following are not included:

  • Overtime
  • General Holiday pay
  • Termination pay
  • Tips
  • Expenses and allowances

If an employee is terminated or leaves before the first year, you must pay them 4% of their wages on their final cheque for their vacation pay.

 

General Holidays

What are they?

General Holidays, or as they are more commonly referred to statutory holidays, are paid days off work legislated by the provincial government.

In Alberta there are 9 mandatory statutory holidays and 3 optional ones. Each of these are listed in the chart below for your reference.

General Holiday Mandatory/Optional 2019 2020
New Years Day Mandatory January 1 January 1
Family Day Mandatory February 18 February 17
Good Friday Mandatory April 19 April 10
Easter Monday Optional April 22 April 13
Victoria Day Mandatory May 20 May 18
Canada Day Mandatory July 1 July 1
Heritage Day Optional August 5 August 3
Labour Day Mandatory September 2 September 7
Thanksgiving Day Mandatory October 14 October 12
Remembrance Day Mandatory November 11 November 11
Christmas Day Mandatory December 25 December 25
Boxing Day Optional December 26 December 26

 

How are they paid?

General holidays are to be paid to most employees immediately upon their employment. However, there are certain situations when you do not have to pay an employee for a general holiday, they are:

  1. An employee does not show up to work when they are scheduled to work on the general holiday
  2. An employee is absent without the employer’s consent on their regular working days surrounding the general holiday.

When paying an employee for a general holiday, there are 2 situations that can arise:

Did not work on general holiday

Pay the employee Average Daily Wage (5% of Wages + Vacation Pay + General Holiday Pay from the previous 4 weeks)

Worked on the general holiday

Employers can choose one of the below 2 options:

  • Pay Average Daily Wage plus 1.5x employees time worked on that day (including overtime)
  • Pay regular wages plus provide a future day off paid with their Average Daily Wage

If you chose the second option and the employee leaves the business before they take their day off, you must pay them their average daily wage on the final pay cheque.

 

You can check out the specifics of general holiday pay, here.

As always, if you have any questions about payroll, give us a call today!

 

Payroll FAQ – Part 1

Payroll is one of the most important aspects of your business if you have employees.  It can also be one of the most complicated functions to understand. The government and your employees expect you to get it right. This is the first post of two where we will cover the four most frequently asked questions we get from our clients about payroll.

What is the minimum wage?

Every province has a different minimum wage that is set by the government. In Alberta the minimum wage was raised to $15 per hour on October 1, 2018.

This wage is the same for everyone, there is no longer a lower minimum wage for people who serve liquor or receive tips.

There are some weekly & monthly minimum wages that apply:

  • Salespeople & other professionals – $598/week
  • Domestic employees that live in their employers’ home – $2, 848/month
    • It is important to note if the domestic employee does not live in their employers’ home you must pay them the $15/hour.

In addition to the minimum wage there is a minimum shift length that may apply.

For most employees, you must pay them at least 3 hours at minimum wage if they are required to show up to work (even if they are sent home before this). If your employee earns a wage higher than $15 an hour, you may pay them for actual time worked, as long as it is over $45.

There are some exceptions to this rule where you do not need to pay a minimum of 3 hours. One of which, is if it is the employee who cannot work the full 3-hour shift. Certain individuals also only require a minimum 2-hour shift, an example of this is an adolescent working on a school day.

You can click here for more information on minimum wage.

What is overtime & how is it paid?

Overtime must be paid to employees if they have worked more than 8 hours in a day or 44 hours in a week, whatever is greater. It must be paid at 1.5 times the employees wage. If you choose, you can bank this time for your employees. However, this time must also be banked at 1.5 times the overtime hours and must be used by the employees within 6 months of earning it. You will need a banked time agreement with your staff.

Example of OT:

 

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Total
Week 1 8 10 8 8 9 43
Week 2 9 8 8 8 8 6 47

 

Week 1: OT would be calculated on over 8 hours a day, as the week is under 44 hours.
The employee would get 2 (Tuesday) + 1 (Friday) = 3 x 1.5 = 4.5 hours OT

Week 2: OT would be calculated on over 44 hours a week, as Monday is 1-hour OT, the total of 47 – 44 = 3 is greater. Therefore, the employee would again be entitled to 4.5 hours of OT

 

Not all employees are entitled to Overtime, examples of employees not entitled are:

  • Mangers/supervisors
  • Professions, i.e. lawyers or engineers
  • Salespeople
  • Domestic employees

 

Some industries also carry different Overtime regulations, these can include ambulance attendants & trucking.

You can click here to find out more about OT rules and see complete lists of all the exemptions mentioned above.

 

Payroll FAQs Part 2 will be posted on our blog February 7, 2019. Check back to learn about general holidays and vacation pay!

If you have any questions about payroll, give us a call today!

 

2019 CPP & EI Rates

With the new year comes changes to CPP & EI rates. Below are the new 2019 rates, both have been increased slightly over the 2018 amounts.

 

CPP 2019 2018
Maximum Annual Pensionable Earnings $57, 400 $55, 900
Basic Exemption $3,500 $3,500
Maximum Contributory Earnings $53, 900 $52, 400
Contribution Rate 5.10% 4.95%
Maximum Annual Employee & Employer Contributions $2, 748.90 $2, 593.80
Maximum Annual Self-Employed Contribution $5, 497.80 $5, 187. 60

 

EI 2019 2018
Maximum Annual Insurable Earnings $53, 100 $51,700
Contribution Rate 1.62% 1.66%
Maximum Annual Employee Contribution $860.22 $858.22
Maximum Annual Employer Contribution $1,204.31 $1,201.51

 

It is important to remember that both CPP & EI have special rules. Payroll is not always straight forward, and it is best to have it done by a professional.

If you have any questions we have trained payroll professionals ready to help! Contact us today.

CRA Scammers

CRA Scams

CRA scams are everywhere right now, you hear about them on the news and you see the signs at grocery stores. These scammers find new ways every day on how to get money from Canadians. We may not be able to get them to stop trying, but by being informed you can protect yourself and loved one from losing money.

We have done a post in the past about CRA scams, however we wanted to do another one as we felt that this issue impacts Canadians everyday.

How CRA will contact you

Canada Revenue Agency will first send a letter to your home or business address they have on file about your monies owing. They send letters in brown envelopes and will ask you to call them. These amounts owing should be verifiable by checking your CRA online account, you or your tax professional can do this.

If you receive an email from the CRA you need to ask yourself the following questions:

  • Have I signed up for online mail through my CRA online account? If no, this is automatically a scam
  • Is it asking for personal information in the email? If yes, this is a scam. CRAs emails will simply let you know you have mail waiting for you in your online account

They will never text you to accept an etransfer. This is not how the CRA will give you a refund. CRA will direct deposit the monies they owe you into your bank account or send you a cheque in the mail. You need to sign up for the direct deposit service, which is done either through your online account, through an official form, or by your tax professional when you are filing your taxes. When it comes to refunds you also must ask yourself, am I expecting this? The CRA will not just give you money out of the blue, if it seems too good to be true, it most likely is.

How CRA will talk to you

Scammers may phone you, they have the ability to clone telephone numbers. It may appear to be coming from the CRA itself or your tax preparer. If you are ever in doubt you can hang up and call the CRA back or send your tax preparer an email. Your tax preparer will never be upset that you have emailed them to confirm a phone call.

When you are talking to the CRA they will never:

  • Use aggressive language or swear at you
  • Threaten you in any way, this includes “getting you arrested”
  • Leave you voicemails with personal information in them
  • Leave you an automated voicemail message
  • Tell you not to talk to your tax professional
  • Offer to “phone your accountant for you” and put them on the line
  • Not let you hang up

 

How the CRA deals with monies owing

If you actually do owe money to the CRA they will work with you to get your debt repaid to them. They have payment plans that accommodate how much you can afford, you can find information on that here. They will not ask you for gift cards, bitcoins, banking information, or credit card information. You should always pay the CRA through official channels. These include online banking, at an actual bank or through the CRA my payment portal.

 

How to protect yourself

The best way to protect yourself is to be informed about how the CRA deals with Canadians and about your tax situation. Always hire a tax professional that you can trust and sign up for a CRA online account, which you can do here.

Also remember not to give out any personal information.

Below are resources for you to use if you are ever in doubt of a CRA call.

 

CANADA REVENUE AGENCY

Phone: 1-800-959-8281 (individual tax enquiries line)

Business: 1-800-959-5525 (business tax enquiry line)

THE CANADIAN ANTI-FRAUD CENTRE

Phone: 1-888-495-8501

You can find more information on these scams at the CRA website.

If you have any questions about CRA scams, contact us today.

Holiday Gifts

With the Holidays fast approaching it is important to discuss employee gifts & bonuses. As with most things for payroll, employee gifts have specific rules to follow.

We will start with the disclaimer that this post is only going to cover the basics of the gifting policy outlined by the Canada Revenue Agency that has to do with the holidays. We will be posting another blog in early 2019 that goes into more of the specifics of this policy overall, keep checking back for that!

If you have any questions concerning this policy please give On-Core a call, or check out the policy on the CRA website, here.

 

Holiday Parties

Holiday Parties are a common occurrence at this time of year. You may be thinking to yourself, “this is a post about employee gifts, what does a holiday party have to do with that?” What you may not realize is the CRA has determined an acceptable amount of money you may spend on your employees for a party. An employer is allowed to spend up to $150 per employee on an event. This must include everything, the food, drinks, ticket prices, cab fare home, etc. If you have stayed within this limit then the party is free to the employee, however if you spend over the $150 per employee the entire amount becomes a taxable benefit to your employees.

Gifts

A gift is defined by the CRA as being given to an employee for a special occasion such as a religious holiday, a birthday, a wedding, or the birth of a child. Therefore, gifts for the holidays will fall into this policy.

Cash or Cash Equivalent Gifts

Cash bonuses are always a taxable benefit to your employee and must be added to their income. It always needs to go through your payroll, and therefore your payroll professional must be notified if you have given these monies outside of the normal payroll run.

One thing to note is that gift cards or certificates are referred to as a cash equivalent and must be treated as cash.

All cash benefits are pensionable, and insurable. This means that in addition to income taxes you must deduct CPP & EI.

Non-Cash Gifts

A non-cash gift is something that the employer has bought and given to the employee; this could include items like concert tickets or a turkey for the holidays. An employer has more leeway with non-cash gifts, as long as they fall into the definition laid out by the CRA mentioned above.

You can give an employee a total of $500 worth of gifts in the year before they become taxable. This means you need to be keeping track of the gifts you give out. At the end of the year if you have gifted more than the $500, this amount must be included in the employee’s income. For example, you have given $650 worth of non-cash gifts, $150 ($650 – $500) is the taxable benefit.

All non-cash benefits are pensionable, this means that in addition to income taxes you must deduct CPP & EI.

Some good news, the CRA doesn’t completely nickel and dime your employee gifts, non-cash items of minimal value do not need to be added to $500 calculation. CRA gives the following examples of minimal value items:

  • Coffee or tea
  • T-shirts with employer’s logos
  • Mugs
  • Plaques or trophies

We know this can be complicated to follow but we are here for you if you have any questions.

Paying bills and getting paid easily.

Are you being buried in cheques?  How do you get people paid easily?  How are you paying bills?  How are your employees getting paid?  Would you like this to be more automated while still having approval control?

There are 2 separate options that we use frequently:

  • Bank payment
    • Pros:
      • You can Email transfer money – though this is expensive, but it is basically instant.
      • Set up EFT system through banking
        • the setup can be expensive
        • Once set up you need to plan how many days it will take to get people paid (vendors not as critical as payroll for timing)
      • Both of these your bookkeeper can do with the correct access – depending on setup you can have them set up the payment and you approve-
        • talk to your bank and bookkeeper to set this up properly from the start
      • Can pay Vendors and Payroll
    • Cons:
      • Bookkeepers have to manually add transactions (usually) so there is a data entry component
      • Can need a separate login and setup for government remittances
      • Can get expensive depending on monthly fees and number of transactions 0 depending on your banks fees
      • Email transfers have a low daily limit that can limit what you can pay – this can get very problematic for payroll

 

  • Pros:
    • Transfers data from Quickbooks and Quickbooks online (no double data entry)
    • Can send money to anyone with a bank account
      • Sends a direct payment if you have the bank account number
      • Sends a paper cheque for you if you do not have a bank account number
    • Costs less monthly than the bank setup
    • Can be set up so that you need to approve the batch before it is paid – can have multiple approval levels
    • Can set up recurring AR so that it comes in automatically
    • Can pay Government remittances too.
  • Cons:
    • Need to be aware of timelines- takes longer than bank usually
      • This can be mitigated with some planning and a bank access login too
  • Ask your bookkeeper for details – we can get you set up correctly and can get available discounts

Get rid of boxes of paper – Hubdoc makes life easier.

Did you know there is a way to stop keeping all your receipts and still get all your information to your bookkeeper.  Not only that but Bookkeeper will get it real time and stop chasing you for items.

Bookkeepers can  stop calling and asking for everything- we just remind you of the few things you are missing.  Does it sound like dream?

Welcome to the technology of today.  With Hubdoc and Quickbooks online you just take a picture with your phone when you get a receipt and then throw it in a box.  We don’t want to see the receipt or the box – we just recommend you keep the paper in case you get a really picky auditor.

The Joy of Hubdoc

  • Hubdoc keeps pictures of all your receipts – in folders by vendor for you
  • Hubdoc does some of the busy work of entry – we still look at every receipt but it can be faster than flattening, sorting, entering and then filing your receipts for you.

Hubdoc pulls statements for you – we have it already.

  • Most places you log in to a website and get the statements- Hubdoc can do that
  • If the vendor emails you statements- it can be emailed directly to Hubdoc for you.

Stressless bookkeeping

  • We log into your hubdoc account and code receipts and publish to Quickbooks online for you
  • We do it closer to real time – as soon as your statement come from the bank we can reconcile
  • We know within a week if you are missing a receipt and can ask about it right away –
    • While you still remember what it is.  Not months later – what was that Walmart receipt for?
    • You might even still have the receipt in your coat pocket

Reporting when it helps you – not months later when you bring in your receipts and statements.

  • Your monthly reports can come out within a week of your bank statements most of the time – this means you can make better decisions
  • What effected last months profits?
  • What needs to change?
  • Where can I save money?
  • Did that advertising campaign bring in sales?

What you need to do:

  • Let us know you want Hubdoc and Quickbooks online
    • We will tell you if your situation is not a good fit for Quickbooks online
      • most companies are a good fit now
  • We set up the Hubdoc and Quickbooks online accounts
  • They bill us, we bill you
    • Bookkeepers get a discount and can pass the savings on to you
  • You log into Quickbooks online and connect your bank feeds
    • We can walk you through this if needed
  • Come in and we show you how it works
    • How to connect your bank, credit card, utilities….
    • How the app works on your phone
    • Options for getting your information into Hubdoc
    • put all your receipts into Hubdoc
    • Wait for your reports- or login to Quickbooks online

If you want to learn more – call us for a training

Hubdoc Bronze Partner

New CPP 2018 and EI 2018 Rates

The new CPP and EI rates have been released for 2018

 

The employee and employer contribution rates for 2018 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contributions to the plan for 2018 will be $2,593.80 each, and the maximum self-employed contribution will be $5187.60. The maximums in 2017 were $2564.10 and $5128.20.

 

The EI rates for 2018 are 1.66% up to the maximum annual insurable earnings of $51,700 with an max annual employee premium of $858.22 and employer max of $1,201.51.

The EI rates for 2017 were 1.63% up to the maximum annual insurable earnings of $51,300 with an max annual employee premium of $836.19 and employer max of $1,170.67.

CANADA REVENUE AGENCY (CRA) PHONE SCAM

CRA will not phone you about owing money! If there is ever any tax money outstanding on your personal or business account, CRA will send a letter to your home address they have on file.  You  will get a brown envelope asking you to call them first.  If someone calls you from the “CRA” most likely it is a phone scam.

 

Common Phone Scam Tactics:

  • Extremely aggressive speech. They’ll try to make you panic over your finances. (A government agency would never conduct itself like a high-pressure salesman!)
  • Threats to arrest you or get the police to go to your home if you don’t pay ASAP (CRA has no power to do this.)
  • Telling you not to talk to anyone else while you’re on the phone with the scammer (entrapment)
  • Telling you to go straight home to look up personal/banking information
  • They will hang up on you first if it sounds like you’re not complying, or are too suspicious of them
  • Scammers may also try similar methods with text messages and emails

 

Protect Yourself and Your Personal Information:

  • Do not disclose your SIN or BN (CRA already has this on file, they wouldn’t ask for it on the phone)
  • Do not disclose information about your bank account numbers, credit cards, etc.
  • If you receive a scam phone call (or what you suspect might be one), report it to the police or the Canadian Anti-Fraud Centre (contact info below)
  • You can call CRA yourself and ask if anything is wrong with your account (contact info below)
  • Tell them to call your Rep – that’s us – don’t tell them who your rep is the real CRA knows and they have no problem calling us to work through issues.
    • If we have done your taxes we are on your account as a Rep.
    • If we do your business books we got you to fill out the RC59 and we are your Rep.
  • If you really do owe money we have ways to pay it without giving the CRA any information- they do not want it over the phone anyway.

 

CANADA REVENUE AGENCY

Phone: 1-800-959-8281 (individual tax enquiries line)

Business: 1-800-959-5525 (business tax enquiry line)

My Account for Individuals:  sign up to access your personal tax information online

Fraud section of the CRA website with examples of scam calls.

 

 

THE CANADIAN ANTI-FRAUD CENTRE

Phone: 1-888-495-8501

Hours: Monday to Friday, 9:00 AM – 4:45 PM (Eastern Time)

Online Fraud Reporting System:  requires either a GC Key or an online banking Sign-in Partner

What to Do if You’re a Victim: Fraud Center

 

If you have any questions call us and we can help you with it – do not let a phone call stress you out – if they are aggressive it is a phone scam.

Where did my money go? CRA Seizing accounts

Do you owe money to the CRA?

Next time you look at your bank account you may be in for a big surprise!

The CRA has been seizing accounts lately for back payments without warning.  Sometimes there are payment arrangements that have been made that have gone to the wrong account – as in the attached article.

Sometimes you get one notice – you need to pay attention to the brown envelopes!!!!

Inevitably they are pulling the money the day before payroll is due and it is making running your business harder than normal.

If you owe anything to the CRA you need to watch out for this- it has happened to a few of our clients within the last week – both of which were making payments to the CRA for amounts owed.

 

We can pay and monitor your CRA balances and ensure the payments made are going to the correct place – contact us for details