National Payroll Institute PF1 : Payroll Fundamentals 1Exam

PF1 real exams

Exam Code: PF1

Exam Name: Payroll Fundamentals 1Exam

Updated: Oct 14, 2026

Q & A: 75 Questions and Answers

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National Payroll Institute PF1 Exam Syllabus Topics:

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

                                National Payroll Institute Payroll Fundamentals 1Exam Sample Questions:

                                Question #1

                                Michael is an employee in Alberta who is paid bi-weekly and earns $1,600.00 per pay period. He has a taxable meal allowance of $30.00 per pay period. His federal and provincial TD1s on file show a claim code
                                2. Michael already reached the annual maximum first and second Canada Pension Plan (CPP) contributions before this pay. Calculate his total federal and provincial income taxes.

                                Reveal Solution  Discussion  0

                                Correct Answer:

                                (total federal + Alberta tax): $173.48
                                Explanation:
                                Taxable gross for the period = $1,600.00 + $30.00 = $1,630.00 (a taxable allowance is included in income for tax withholding).
                                Using CRA T4032-AB (Biweekly, 26 pay periods) with claim code 2:
                                Federal tax at pay $1,630 falls in the $1,619-$1,635 range # CC2 = $107.35.
                                Alberta provincial tax at pay $1,630 falls in the $1,628-$1,644 range # CC2 = $46.55.
                                Subtotal tax from the tables = $107.35 + $46.55 = $153.90.
                                CRA notes these tax tables build in the tax credits for CPP/EI, so when CPP is not deducted (because annual max already reached), you must increase tax withholding accordingly.
                                CPP that would have been deducted this pay (using CRA rates/YBE):
                                Pensionable = $1,630 # ($3,500/26 = $134.62) = $1,495.38; CPP (4.95% + 1.00% = 5.95%) = $88.98.
                                Add back missing credits: Federal 14% × 88.98 = $12.46; Alberta 8% × 88.98 = $7.12 # total $19.58.
                                Final total tax = $153.90 + $19.58 = $173.48.

                                Question #2

                                Which of the following types of payments made by a private organization would not be subject to all statutory deductions?

                                • A. Performance bonus
                                • B. Retroactive adjustment
                                • C. Directors' fees
                                • D. Vacation pay when no time was taken
                                Reveal Solution  Discussion  0

                                Correct Answer: C  🗳️

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                                Question #3

                                A Third Party Demand is issued by the Canada Revenue Agency for:

                                • A. Outstanding child support and/or maintenance payments
                                • B. Overpaid Employment Insurance benefits
                                • C. Unpaid income taxes or unpaid statutory deductions
                                • D. A debt owed to a third party creditor
                                Reveal Solution  Discussion  0

                                Correct Answer: C  🗳️

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                                Question #4

                                When would a Record of Employment be issued for an employee paid mainly by commission?

                                • A. When the employee has not earned any commission after six months
                                • B. An employee mainly paid by commission is not entitled to receive a Record of Employment
                                • C. When the employee has had seven consecutive calendar days without both work and insurable earnings
                                • D. When the employment relationship has been severed
                                Reveal Solution  Discussion  0

                                Correct Answer: D  🗳️

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                                Question #5

                                A paper Record of Employment must be issued:

                                • A. When requested by Service Canada
                                • B. All of the above
                                • C. Within five calendar days of an interruption of earnings
                                • D. When an employer becomes aware of an interruption of earnings exceeding seven calendar days
                                Reveal Solution  Discussion  0

                                Correct Answer: B  🗳️

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