National Payroll Institute PF1 : Payroll Fundamentals 1Exam

  • Exam Code: PF1
  • Exam Name: Payroll Fundamentals 1Exam
  • Updated: Sep 07, 2026
  • Q & A: 75 Questions and Answers

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National Payroll Institute PF1 Exam Syllabus Topics:

SectionObjectives
Earnings, Deductions, and Taxation- Types of earnings
  • 1. Taxable benefits
    • 2. Regular wages and salaries
      • 3. Overtime and special payments
        - Deductions and remittances
        • 1. Statutory deductions
          • 2. Employer remittance responsibilities
            • 3. Voluntary deductions
              Payroll Records and Compliance Reporting- Government reporting
              • 1. Year-end reporting (T4 slips)
                • 2. Remittance reporting processes
                  - Recordkeeping requirements
                  • 1. Employee payroll records
                    • 2. Retention requirements
                      Payroll Fundamentals and Compliance Framework- Payroll system overview in Canada
                      • 1. Employer payroll obligations
                        • 2. Payroll process cycle (gross-to-net)
                          - Payroll legislation and regulatory bodies
                          • 1. Canada Pension Plan (CPP) requirements
                            • 2. Employment Insurance (EI) rules
                              • 3. Income Tax Act basics

                                National Payroll Institute Payroll Fundamentals 1Exam Sample Questions:

                                Question 1

                                Which of the following types of earnings are not considered income from employment?

                                A. Vacation pay
                                B. Commissions
                                C. Regular salary
                                D. Severance pay


                                Question 2

                                Which of the following company-compulsory deductions would reduce the employee's gross taxable income for purposes of withholding income taxes?

                                A. Employee contributions to a group Registered Retirement Savings Plan (RRSP)
                                B. All of the above
                                C. Employee payment of provincial health care plan premiums
                                D. Employee payment of a portion of group benefit plan premiums


                                Question 3

                                An employee in Ontario was paid a $25,000.00 retiring allowance. The eligible portion was $15,000.00 and was transferred to the employee's Registered Retirement Savings Plan (RRSP) by the employer. Calculate the income tax on the non-eligible portion.

                                A. $1,000.00
                                B. $7,250.00
                                C. $5,000.00
                                D. $2,000.00


                                Question 4

                                Dollar amounts that are paid to an employee to cover expenses that they incurred while performing their job, but are not considered in the calculation of an employee's earnings are:

                                A. Allowances
                                B. Earnings
                                C. Expense reimbursements
                                D. Benefits


                                Question 5

                                Paul Westin works for an Alberta organization and receives a regular salary of $1,800.00 semi-monthly. He will be receiving a payout of accrued vacation with no time taken of $1,400.00 on a separate cheque. He has federal and provincial TD1s on file with claim code 1. Calculate the income taxes to be withheld on his vacation pay.


                                Solutions:

                                Question 1
                                Answer: D
                                Question 2
                                Answer: A
                                Question 3
                                Answer: D
                                Question 4
                                Answer: C
                                Question 5
                                Answer: Only visible for members

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