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National Payroll Institute PF1 Actual Tests : Payroll Fundamentals 1Exam

PF1 actual test
  • Exam Code: PF1
  • Exam Name: Payroll Fundamentals 1Exam
  • Updated: Sep 14, 2026
  • Q & A: 75 Questions and Answers
  • PDF Demo
  • PC Test Engine
  • Online Test Engine
  • Total Price: $59.99  

About National Payroll Institute PF1 Exam Actual Tests

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National Payroll Institute PF1 Exam Syllabus Topics:

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

                                National Payroll Institute Payroll Fundamentals 1Exam Sample Questions:

                                Question #1

                                Steve is physically disabled and his employer pays for his parking spot. This is considered:

                                • A. A non-cash taxable benefit
                                • B. A cash taxable benefit
                                • C. A taxable allowance
                                • D. None of the above
                                Reveal Solution  Discussion  0

                                Correct Answer: D  🗳️

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                                Question #2

                                Ursula is 17 years old, works in Quebec and earns $750.00 weekly. Ursula pays weekly union dues of $18.00 along with a special weekly union assessment of $10.00 for construction of a new union hall for its members.
                                Ursula also has registered pension plan (RPP) contributions of $20.00 deducted from each pay. Calculate Ursula's net federal taxable income.

                                Reveal Solution  Discussion  0

                                Correct Answer:

                                $712.00
                                Explanation:
                                For payroll income tax purposes, net taxable income starts with the employee's gross taxable income and then subtracts only those deductions that are deductible for income tax and can be recognized at source. CRA payroll guidance shows this approach by subtracting items such as RPP contributions and union dues when determining net taxable income for calculating income tax deductions.
                                Gross taxable income (weekly): $750.00.
                                RPP contributions are deductible (the amounts reported from box 20 of the T4 are generally deductible).
                                Regular union dues are deductible; however, the CRA states that deductible annual union/professional dues do not include special assessments or charges for anything other than ordinary operating costs. A levy specifically for constructing a new union hall is a special assessment, so it is not deductible as union dues.
                                So the deductions that reduce federal taxable income here are: $18.00 (union dues) + $20.00 (RPP) = $38.00.
                                Net federal taxable income = $750.00 # $38.00 = $712.00.

                                Question #3

                                Matt earns $10.10 per hour and works 37.5 hours per week. Calculate Matt's regular bi-weekly earnings.

                                Reveal Solution  Discussion  0

                                Correct Answer:

                                $757.50
                                Explanation:
                                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.

                                Question #4

                                Evangeline earns $1,075.00 weekly plus $154.00 in overtime. Calculate Evangeline's Quebec Parental Insurance Plan (QPIP) premium.

                                Reveal Solution  Discussion  0

                                Correct Answer:

                                $5.28 (employee QPIP premium for the week)
                                Explanation:
                                QPIP premiums are calculated on an employee's insurable earnings in Quebec (up to the annual maximum insurable earnings). For 2026, Revenu Quebec 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).

                                Question #5

                                Paula is granted a pay increase. The paperwork informing the payroll department of the pay increase is two pay periods late. What method would be used to calculate income taxes on the separate retroactive payment?

                                • A. Tax table method
                                • B. Retroactive tax method
                                • C. Lump-sum tax method
                                • D. Bonus tax method
                                Reveal Solution  Discussion  0

                                Correct Answer: B  🗳️

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